Low prices in certain markets create a unique opportunity for young homebuyers

Brendan Phillips
ByΒ Brendan Phillips

mortgage news 6/22


Here’s a look at the latest developments in the mortgage market for the week beginning 6/22/20.

  • Low prices in certain markets create a unique opportunity for young homebuyers
  • Government sponsored stimulus continues to support economic rebound
  • New infographic shows rise in LGBT homeownership

Low prices in certain markets create a unique opportunity for young homebuyers

For years, skyrocketing home prices in major urban areas have presented a significant obstacle for younger, less financially established first-time homebuyers. It’s one reason that the median age of all homebuyers has risen from early thirties to late forties over the past few decades. But COVID-19’s impact on both the housing market and the cost of obtaining a mortgage could usher in a new wave of young homeowners.

Though home prices didn’t fall much nationally during Covid-19, some local markets experienced significant declines. With the pandemic driving interest away from more densely populated areas, low prices in certain areas like Houston, Chicago, and Portland present a unique opportunity for younger generations to afford starter homes. Now that mortgage rates are expected to hover at historic lows for some time, we could see a swath of first-time homebuyers cropping up in these markets to take advantage.

While low inventory may still be a problem today, there is a large cohort of homes owned by those over 60 years of age, pointing to a β€œSilver Tsunami” of available homes coming on the market in suburban areas. This could keep prices flat for an extended period of time while pent up housing supply unwinds to younger generations.

Government sponsored stimulus continues to support economic rebound

The extraordinary amount of fiscal and monetary stimulus that both Congress and the Fed have put into the economy has already started to spur economic growth.

Last week, the Fed extended their bond-purchase program to include individual corporate bonds, meaning that companies in need of financing during periods of lower revenue can access it affordably. This will stave off a wave of potential bankruptcies that could have occurred while the spread of COVID-19 is still being contained. The Fed has essentially put a floor under bond prices (including Treasuries, MBS, and corporate debt) which puts downward pressure on interest rates throughout the economy.

Freddie Mac research showed that the government’s stimulus packages, including direct payments to taxpayers and increased unemployment benefits, have already contributed to a faster than expected rebound in economic activity, including in the housing market. Purchase activity has rebounded to the same level of last year, while refinance activity remains elevated, and the number of loans in forbearance has continued its slow but steady decline.

New infographic shows rise in LGBT homeownership

Historically, the LGBT community has faced an uphill battle when it comes to housing, but homeownership numbers are on the rise. A new infographic from Better.com, however, shows that, thanks to key social justice reforms and innovations in lending, more LGBT house hunters are able to find a place they call home.

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