Much has been written about the challenges that are keeping millennials — the largest-size generation in the country — from homeownership.
But according to one lender, young people in their 20s and early 30s are maturing, forming households and flooding the housing market.
Endeavor America Loan Services, a national wholesale lending company, released a topical advisory this week compiled of data from its loan applications that indicates millennials may be fueling a housing boom that will shape the mortgage market in the near term.
Like the recent analysis of many other lenders, economists and market watchers, Endeavor noted that millennials still face significant obstacles to buying a home, such as:
- A weak job market
- Low-paying salaries
- Inability to save for a down payment
- Significant student loan debt
- A delay in plans to establish households and families
But in surveying data from 2014 and early this year, which includes more than 5,400 millennial homebuyers in 49 states, Endeavor says the millennial mortgage market may finally be expanding as young professionals stabilize themselves financially, form families and put down roots.
“The headlines over millennials’ reluctance to enter the mortgage market represented one snapshot in time,” said Endeavor CEO Darius Mirshahzadeh. “Millennials are maturing, recovering from the recession and forming families. They also invested heavily in higher education and are growing in their careers. All of these factors point to what we are now seeing — millennials flooding into the housing market in a wave of first-time homebuying that will set a chain reaction of step-up home purchases and influence the mortgage market for decades to come.”
Forces like rising rents and improved job prospects are driving a real estate boom among millennials, Endeavor said. The lender noted that according to the Zillow Housing Confidence Index, about 5.2 million renters say they expect to purchase a house in 2015, an increase of 4.2 million a year earlier.
Endeavor’s data also revealed that more than 71 percent of millennials bought single-family homes; only 18 percent bought a townhome or condo.
On average, the borrowers in Endeavor’s data were around 28 years old, had a credit score of 664 and have been at their job for about three years. The gender breakdown was 71.5 percent male and 29.5 percent female, and around 54 percent of borrowers were married with less than one dependent. More than a third of borrowers had bachelor’s or graduate degrees.
The average loan amount was $182,879. More than 41 percent of borrowers used a co-signer to qualify for financing, and 20 percent received some form of assistance from a family member for their down payment.
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