Recently, it was reported that many consumers still believe they need at least 20% down to buy a home.
Although that may be true, a recent Freddie Mac survey finds that most renters do not have savings for this down payment as their top priority. In fact, it’s not one of their top 3 goals (Renters).
The Freddie survey found that most trends for home buying possibilities, in the short run, are heading in the wrong direction. Although, many renters would like to own home, and say they may buy within the next 3 years, their top 3 priorities are saving money for:
- Emergency or unexpected expenses (59%)
- Retirement (51%)
- Children’s Education (50%)
Saving for a down payment came in fourth at about 39%. There are differences in these priorities among Millennials, Baby Boomers, and GenXers. (Hey, what are we calling the next generation, GenTech?) But, all indicate that if they are now renting, they plan to continue to do so for the near future. Not a real rosy outlook for housing, at least for the short run.
Looking on the bright side, with many renters looking to buy in the next 3 years, a rate hike in December may accelerate their plans. A slight increase in the Fed rate may also have the effect of stabilizing home prices making them more affordable. This coupled with relatively low mortgage rates, at least for a while, and increased consumer education about low down payment programs, may help to spur some renter’s home buying interests.
Based on MBA research, almost 16 million new households will be created in the US by the year 2024. This study reports this new housing demand will be driven by Millennials (where have we heard that before) and minority buyers, both among owner-occupied home and rental property sales. This could create the greatest housing demand the country has ever seen. Now, that’s a lotta opportunity for lenders.
Are you prepared to take advantage of the new opportunities? Do you have the technology in place to service these new tech-savvy home buyers? Do you offer online applications and approvals?
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