money Experts: Many millennials won't wait until spring to buy a house
Experts expect many younger adults to keep house-hunting during the holidays and into the new year, thanks to a confluence of favorable factors.
Sales of previously owned homes are expected to increase 7.3% year over year in the fourth quarter and 6.2% in the first quarter in 2020, while new home sales are estimated to jump by 19.2% and 6.1%, respectively, according to the latest forecast by the National Association of Realtor.
Lower interest rates, an uptick in new houses on the market, and moderating prices will convince some millennials to stay in the market during the colder months, rather than wait until spring when the traditional home-buying season begins.
“Interest rates are significantly lower than they were this time last year, the stock market is at the highs and job and income growth are good,” said James McGrath, cofounder at Yoreevo, LLC, a real estate firm. “Millennials will certainly be buying more homes over the next three to six months.”
Favorable buying conditions
Thanks to the Federal Reserve, the interest rate environment remains favorable. The central bank cut a key benchmark rate for the third time this year, which indirectly influences longer-term rates that mortgage rates track.
The average rate for a 30-year fixed mortgage – the most common home loan for homebuyers – was 3.99%, according to the Mortgage Bankers Association. That’s down considerably from 5.16% a year ago.
There may be more choices, too, for winter homebuyers.
The NAR predicts a 13.5% year-over-year uptick in single-family units on the market, while the number of new homes under construction is expected to increase 13.1% from a year ago.
Prices, too, may be more advantageous.
“I think last year you saw the peak for housing prices,” said Jeremy Sopko, co-founder of Nations Lending Corp., a mortgage lender. “This year we haven’t seen the appreciation.”
Should you buy this winter?
Winter is usually a slower buying season. For instance, the number of sales in January this year were almost half of the volume in May 2019, according to Redfin data.
Still, winter buyers must consider the same factors as any homebuyer.
“If someone is not planning to be in their home for five years they shouldn’t buy,” McGrath said. “It won’t be worth it.”
If you don’t have enough for a down payment, have a weak credit score, or a lot of debt, perhaps you should wait to get your financial house in order. But don’t forget to browse all your mortgage options, said Joe Mellman, senior vice president at TransUnion, a credit reporting agency.
There are government-backed loan programs that can qualify buyers who have debt, smaller down payments or imperfect credit scores.
“People seem to believe you need low or no existing debt to get a mortgage,” Mellman said.
Dhara is a writer for Yahoo Finance. Follow her on Twitter @dsinghx.
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