Leading mortgage-borrowing generation

By dollar volume, millennials now take out more mortgage money than all other generations, as outlined by research by Realtor.com. They’ve surpassed both Generation X as well as the baby boomers.

Millennials currently leading mortgage-borrowing generation

Realtor.com based its analysis on data about residential mortgage loan originations from Optimal Blue, indicate that while the median home buying price millennials take on is still less than that of Generation X or baby boomers, millennials are showing interest in more cost-effective markets. Additionally, millennials are making lower down payments and agreeing to larger mortgages in comparison with Gen Xers and baby boomers.

“Millennials are getting older, with better jobs and deeper pockets, allowing them to expand their collective purchase power, and hence, their footprint in the market,” says Javier Vivas, director of economic research at realtor.com.

“The stereotype that millennials primarily choose to buy homes and live in large metro areas isn’t the reality,” he adds. “Results show millennials’ expansion is more heavily conditioned by affordability than in prior years, so their eyes are set on less traditional secondary markets where homes and jobs are now available and plentiful.”

Affordability is such an important factor for millennial home-buyers that they’re moving to places previous generations haven’t, like Buffalo, N.Y., the top affordable market for millennials, as outlined by realtor.com’s study.

Millennials’ increased buying power

Millennials are still primarily in the life stage that needs starter homes. Despite a reduced median purchase price ($238,000) than the two generations before them, (with baby boomers and Gen Xers spend an average $264,000 and $289,000, respectively), millennials are increasing their purchase price faster than previous generations which signifies that they’re starting to move beyond starter homes.

Since early 2017, millennials have been the most significant mortgage purchasers by the number of loans originated, surpassing Generation X as the leader in January 2017. As 2018 came to a close, millennials took on nearly half (45 percent) of all new mortgages, as compared to 36 percent for Generation X and 17 percent for baby boomers.

In November 2018, millennials finally overtook Generation X as having the largest share of new loans by dollar volume – 42 percent in December compared to 40 percent for Generation X and 17 percent for baby boomers.

Millennial home buying driven by affordability

Together with increasing their buying power and taking on larger mortgages, the data shows millennials have consistently made lower down-payments than other generations since 2015. While other generations have raised their downpayments as a result of rising prices, millennials haven’t been able to do so.

Millennial down-payments averaged 8.8 percent in December 2018, compared to 11.9 percent for Generation X and 17.7 percent for more equity-rich baby boomers. The down-payment challenge for millennials is a likely reason they’re moving more to affordable markets where their income goes further.

Ready to find your new home here in the Tampa Bay and Surrounding Areas? Nick, Cindy & Nicholas Davis with RE/MAX Premier Group are here to assist you with all your Real Estate Needs. We are always available at 813-300-7116 to answer your questions or you can simply click here and we will be in touch with you shortly.

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