Is Now the Best Time for Millennials to Buy?
According to the Bloomberg article, “Rising rents are finally forcing millennials to buy houses,” millennials are steadily becoming the most prominent segment of homebuyers today. Millennial homebuyers represented 32% of the US housing market in 2014 according to the National Association of Realtors.
In the wake of the 2008 crisis, market uncertainty was only one of the reasons millennials chose to rent over buy. Seven years later, “5.2 million renters say they expect to purchase a house in 2015, up from 4.2 million a year earlier.”
Why the growth in interested renters to buy? A combination of factors including near historic low interest rates that are expected to climb this summer, and the US rental vacancy rate hitting a 21-year low at the end of 2014, giving landlords leverage to raise rent. As mentioned earlier, the market has improved since the collapse in 2008, and the purchase of a home is largely dependent upon the ability to qualify for a loan and stockpile money for a down-payment.
Good news for Millennials, the unemployment rate in February hit 5.4%, a 5.2% drop from 10.6% in October of 2009. With a strong job market for Millennials and low interest rates, now is perhaps one of the best times to think about buying a home in a millennial’s lifetime.
Unfortunately this is not all good news. Inventory rates are stressed in this under $300k price range across the country, but for those who can qualify for a loan and take action, once could amass thousands in savings from interest rate hikes in the near future. Once the rates start to rise, it will be a long time until we start to see rates drop to these levels anytime soon.