Hopeless Millennials

September 18, 2023

A considerable segment of millennials believes they've lost their best chance at homeownership.

With a significant mortgage rate of 7.18% reported last week, and housing costs escalating, many sellers are remaining hesitant, resulting in diminished inventory and escalating prices.
A recent Redfin survey highlights that approximately 20% of millennials are skeptical about ever purchasing a home.
This sentiment has roots in their historical financial challenges, notably entering the labor market during the Great Recession.
This experience not only impacted their professional trajectory but also influenced their perspective on homeownership as a secure investment. Consequently, many delayed their first home purchase or leaned on family gifts and inheritances for down payments.
While the pandemic period offered some millennials opportunities due to record-low mortgage rates, the current rate, consistently above 7%, makes prospects appear daunting.
Contrastingly, the optimism is slightly higher among Generation Z, bolstered by a promising labor market.
The recent Labor Department report highlighted the addition of 187,000 jobs in August, emphasizing the resilience of the job market even amidst high interest rates.

Real-Estate Startup Roam Aims to Slash Mortgage Rates

The housing market is grappling with soaring mortgage rates, which have reached 7.18% for the 30-year mortgage—more than double from two years ago.
Amidst this, a new startup named Roam, founded by ex-Uber staffer Raunaq Singh, promises a game-changer for home buyers.
Launched last Wednesday, Roam bridges the gap between sellers who secured low rates and potential buyers.
The platform capitalizes on "assumable mortgages," allowing sellers to hand over their loans to buyers.
Although such mortgages, backed by the Federal Housing Administration and the US Department of Veterans Affairs, are lawful, they're rarely used—mostly due to buyers being unaware of eligible homes.
Roam aims to change this. With its real estate brokerage license, it identifies homes fit for assumable loans through MLS records.
For its services, Roam deducts a 1% fee from the buyer's closing costs. The startup, which has raised $1.25 million in seed funding and has a team of 10, targets 4.4 million government-backed homes across five states.
Singh's ambition for Roam centers on improving home affordability, as current rates risk sidelining numerous American families from the housing market.

U.S. Homebuilder Sentiment Dips Amid Rising Mortgage Rates

U.S. homebuilders' confidence has taken a downturn for the first time in seven months, largely attributed to persistently high mortgage rates.
The National Association of Home Builders/Wells Fargo Housing Market Index for September indicates a 5-point fall to 45, following a 6-point drop in August—scores below 50 signify a negative outlook.
Breaking down the index:
- Current sales conditions: Down 6 points to 51.
- Sales expectations for the next half-year: Down 6 points to 49.
- Buyer traffic: Down 5 points to 30.
The rising 30-year fixed mortgage rate, which has surpassed 7% since June, has impacted affordability. Consequently, September saw 32% of builders slashing prices, marking a peak since December 2022. The average reduction was 6%.
NAHB's chief economist, Robert Dietz, pointed out the clear influence of these high rates on both builder confidence and consumer demand.
Interestingly, the recent survey highlighted a spike in first-time buyers, constituting 42% of new single-family home purchases this year—significantly above the usual 27%.
Despite the demand due to limited supply, builders face additional challenges, including labor shortages and rising insurance costs. Regionally, sentiments dipped across all zones, most notably in the Midwest and the West.

How was today's shake?

Send us your feedback, ideas, love at [email protected]