According to a recent survey conducted by real estate brokerage Redfin, approximately 1 in 5 millennials believe they will never be able to buy a home. The challenges faced by millennials in the housing market include high mortgage rates, rising home prices, and low inventory. The financial setbacks experienced by this generation, such as entering the job market during the Great Recession, have hindered their ability to purchase a home. Additionally, the idea of homeownership being a safe investment was dissuaded due to the economic downturn.
Even when millennials do manage to buy a home, many rely on financial assistance from family members or inheritances to afford a down payment. However, the pandemic did provide an opportunity for some millennials to enter the housing market, taking advantage of record low mortgage rates. Nevertheless, not everyone was financially ready or willing to make such a commitment, and now with the 30-year fixed mortgage rate hovering above 7%, buying a home seems out of reach for many.
In contrast, Generation Z, born between 1997 and 2012, appears to be more optimistic about the prospects of homeownership. The labor market has been more favorable for this generation, with stronger job growth compared to the challenging conditions faced by millennials. This optimism stems from their confidence in their ability to work, save, and eventually purchase a home.
The impact of high mortgage rates on the housing market is significant. With sellers staying out of the market and low inventory, home prices continue to rise. This creates barriers for millennials and other potential buyers, further discouraging them from investing in homeownership. Unless there is a significant shift in the housing market, it seems that high mortgage rates will continue to pose challenges for those wishing to enter the market.
Sources:
– Redfin survey conducted by real estate brokerage Redfin
– Redfin chief economist Daryl Fairweather
– Redfin survey on homebuyers under 30
– Freddie Mac’s report on mortgage rates