After years of concern from industry experts about sluggish first time buyer activity, we’re (finally!) preparing to see a major shift in the housing market. This time last year, only 33% of people planning to buy a home in 2016 were first-time buyers This year, however, a staggering 52% of people planning to buy in 2017 are first timers, and the vast majority of these first-time homebuyers are Millennials, approximately ages 18-35.
Wondering why so many more young people are buying real estate? It’s likely due to affordability and the improving economy. Mortgage rates remain extremely low, allowing all buyers to borrow money cheaply. Additionally, the unemployment rate is low and wages are finally beginning to rise – two big factors for the Millennial age group.
While this increased home buying activity is undoubtedly a benefit for the real estate market, there are a few things to watch carefully. First, we can expect to see even more competition for affordable homes in the suburbs. We’ve experienced plenty of bidding wars in the past few years, but the demand might outpace the supply even more in 2017. Additionally, with increased buyers (and mortgage borrowers!) in the market, we shouldn’t be surprised to see mortgage rates increase this spring.