We were intrigued to read an article on the Business Insider website earlier this week that provided yet more evidence that millennials (people born between 1977 and 2000) are finally purchasing their own homes in more significant numbers.
The article quotes Jeffrey Mezger, CEO of one of KB Homes, one of the nation's largest homebuilders. In a recent communication with shareholders he said: "Our results in the third quarter also reflect a continued upswing in demand, driven by rising household formation, favorable demographics, job and income growth and further easing of mortgage restrictions. We are seeing increasing activity emerge in the more affordable submarkets of each city, primarily from first-time and first move-up buyers; a trend that creates significant opportunity given our expertise in serving these buyers."
In an August blog, we looked at how first-time buyers are significantly impacting on the market and it seems that the trend is being more widely recognized with this latest statement from such a key figure in the homebuilding industry.
It really is difficult to overstate the importance of this trend, because it points to expansion of the housing market in a way that we haven't seen for a long time.
The Business Insider article makes the point that the millennial generation has had to cope with student debt and lives with parents a lot longer than previous generations. This, and other reasons including The Great Recession, of course, formed the broad backcloth to a previous reluctance to purchase a home.
And now the announcement from such an influential player as KB Homes should cascade positively throughout the real estate world.
Even if your home would be out of the reach of most millennials buying a first home, the ripple effect of a vibrant entry level market means increased fluidity of the entire purchasing chain. This will empower more homeowners to upgrade and it will be interesting to see if the medium to long term effect is to help increase the inventory shortages of available homes that characterize our local market in the Albuquerque area and across much of America.
But the best news, of course, has to be reserved for millennials themselves. Our economy has come a very long way since the dark years of recession and arguably nothing is a more powerful sign of this renaissance than young people finally having sufficient confidence in their prospects to make a long term commitment to what is, for most of us, the biggest single investment of our lives.
And let's not forget the major contribution that low mortgage rates have had in this turnaround. While we're seeing rate increases at the moment, rates are still not far off historic lows. Indeed data released on Thursday showed that home sales were at a four month high, just as mortgage rates had reached their own four month peak. It's still an incredible time to lock in a rate and millennials have clearly been quick to seize the opportunity this year.
Whether you're selling your home or looking for that first step on the home ownership ladder, contact us today for the best advice, whatever your situation.