Low inventory of affordable homes is yet another barrier for millennial buyers

As featured in The Washington Post

As the millennial generation enters its prime as home buyers, they are feeling the pinch between very low inventory for entry-level priced homes in the Washington-area market and rising interest rates.

Contrary to much of the conversation these days, the overall inventory of homes is not at a record low. At the end of April 2014, there were almost 5 percent fewer homes fully available than there are right now. However, the price range of homes on the market has experienced a huge shift in the past few years.

In April 2014, 45 percent of all homes on the market were priced less than $500,000, and homes in this price category constituted 67 percent of all sales. Today, 33 percent of homes are priced less than $500,000, and the percentage of total sales has dropped to 62 percent of the market.

No question — inventory is down significantly from this time last year, but the decreases have not been evenly distributed. While overall inventory is down 15 percent, the number of homes priced less than $500,000 is down 26 percent. But 3 percent more homes priced greater than $1 million are available.

In the suburban markets, the differences are even starker. In Northern Virginia and Loudoun County, the number of homes priced less than $500,000 is 32 percent less than last year.

Scarcity of inventory is not the only issue facing millennials — or any other first-time buyer — that makes this a challenging market. Mortgage interest rates are about a half-point higher than they were in November, making homes slightly less affordable. And, ironically, those higher rates are contributing to the relative paucity of new listings coming on the market. In our robust sellers’ market, one might expect there would be a significant jump in the number of sellers taking advantage of very favorable market conditions.

In fact, new listings are up 2 percent in the Metro area year-to-date, compared to the same time last year. Plenty of homeowners who purchased or refinanced in the past few years and locked in sub-4 percent mortgages are in no hurry to sell their homes. The prospect of giving up those very favorable rates, then buying a home in a tight market at higher rates, is keeping people in their homes longer.

Another problem preventing many millennials from buying homes is student loan debt, and that’s certainly not unique to the Washington area. In its “Student Loan Debt and Housing Report — 2016,” the National Associations of Realtors found that among those who are current in their debt repayments, 71 percent of non-homeowners cite student loan debt as the factor delaying them from buying a home. The level of debt impacts both their ability to save for a down payment as well as their debt-to-income ratios to qualify for a mortgage. The delay in buying a home among non-homeowners and homeowners alike is five years.

So buyers of entry-level homes are truly feeling the pinch of both low inventory and higher rates, and many have student loan debt to contend with. Nonetheless, perspective and patience are both virtues. Mortgage rates are still extraordinarily low from a historical perspective, and markets seek balance over time. There needs to be a deeper level of understanding of the mortgage process, including the availability of low down payment loan programs. Millennials and anyone else can be successful buyers with planning and persistence.

15 replies
  1. yeezy boost 350 says:

    Can I just say what a reduction to search out someone who really is aware of what theyre speaking about on the internet. You positively know the best way to carry an issue to light and make it important. Extra folks have to read this and understand this side of the story. I cant consider youre no more widespread since you definitely have the gift.

  2. huarache shoes says:

    I must point out my admiration for your kindness for people who really need guidance on this important niche. Your personal dedication to passing the solution all through had been wonderfully important and have without exception encouraged many people like me to arrive at their aims. Your warm and friendly useful information denotes a whole lot a person like me and especially to my mates. Regards; from each one of us.

  3. michael kors handbags says:

    I precisely wished to thank you so much once more. I do not know what I might have accomplished in the absence of these aspects revealed by you about such a topic. It had become an absolute horrifying crisis in my circumstances, nevertheless taking a look at a new well-written avenue you handled that made me to cry with contentment. I’m just happy for the service and then trust you find out what a powerful job you happen to be getting into teaching other individuals via your webblog. Most probably you haven’t come across all of us.

  4. kate spade handbags says:

    I must show my thanks to the writer for rescuing me from this challenge. Right after researching throughout the the net and coming across suggestions which were not helpful, I assumed my entire life was over. Living devoid of the approaches to the issues you’ve fixed as a result of your good blog post is a serious case, and ones that would have in a negative way damaged my entire career if I had not come across your web blog. Your expertise and kindness in playing with all the things was vital. I am not sure what I would’ve done if I had not encountered such a thing like this. I can at this point look forward to my future. Thanks for your time very much for the high quality and result oriented help. I will not think twice to suggest your web sites to any individual who should have recommendations about this area.

  5. true religion outlet says:

    Thanks for all your valuable effort on this blog. Debby loves making time for investigations and it’s really obvious why. A lot of people notice all regarding the lively mode you give rewarding guidelines on your web blog and recommend participation from others on that content while our favorite child is without question studying so much. Take advantage of the remaining portion of the year. You’re conducting a really great job.

  6. yeezy boost 350 v2 says:

    Can I simply say what a aid to seek out somebody who actually is aware of what theyre speaking about on the internet. You definitely know how you can convey an issue to light and make it important. Extra people have to read this and perceive this side of the story. I cant imagine youre not more well-liked since you positively have the gift.

  7. michael kors outlet online says:

    My husband and i felt really more than happy that Ervin could round up his studies by way of the ideas he was given from your own weblog. It is now and again perplexing just to continually be giving out tips and hints which other folks could have been making money from. So we consider we need the website owner to appreciate because of that. All of the illustrations you’ve made, the easy blog navigation, the relationships you can aid to engender – it is many overwhelming, and it’s really facilitating our son in addition to us believe that the matter is fun, which is exceedingly fundamental. Thanks for the whole thing!

  8. golden goose says:

    My spouse and i were very fortunate Michael could round up his investigation while using the ideas he discovered using your web page. It’s not at all simplistic to just choose to be freely giving guidance which some other people could have been trying to sell. Therefore we recognize we have you to be grateful to because of that. The explanations you have made, the straightforward blog menu, the relationships you will make it easier to instill – it’s many excellent, and it is leading our son and the family understand the subject is fun, which is certainly especially vital. Thanks for all!

  9. adidas nmd says:

    I’m also commenting to make you be aware of of the fantastic encounter my girl obtained browsing your web site. She picked up several things, which included how it is like to possess a very effective teaching character to have many others easily gain knowledge of various extremely tough issues. You truly surpassed my expected results. Thanks for delivering such priceless, trustworthy, informative and also cool tips about your topic to Mary.

  10. ferragamo belt says:

    I needed to compose you one tiny observation in order to thank you so much again with the magnificent guidelines you have discussed above. It has been simply wonderfully generous with people like you to provide easily all a number of people could possibly have made available for an e book to earn some cash on their own, and in particular now that you might have done it if you desired. These secrets as well served like the good way to realize that other people online have similar eagerness the same as my own to know very much more related to this condition. I think there are thousands of more pleasurable instances in the future for individuals that look into your site.

  11. yeezy boost 350 v2 says:

    I actually wanted to develop a brief message to be able to say thanks to you for these pleasant guidelines you are posting at this site. My particularly long internet investigation has at the end of the day been paid with extremely good facts and strategies to talk about with my co-workers. I ‘d tell you that most of us site visitors actually are really endowed to exist in a magnificent website with very many wonderful people with valuable ideas. I feel very grateful to have used the weblog and look forward to tons of more exciting minutes reading here. Thanks again for everything.

  12. converse outlet says:

    Thank you for all your valuable labor on this site. My mom loves getting into investigations and it is easy to understand why. We hear all concerning the lively means you convey both useful and interesting ideas through this blog and in addition foster participation from some other people about this content then our own daughter is now understanding a great deal. Take advantage of the rest of the new year. You’re conducting a dazzling job.

  13. lebron 15 shoes says:

    Thanks a lot for giving everyone a very terrific possiblity to read articles and blog posts from this website. It is often very terrific plus packed with fun for me personally and my office acquaintances to search the blog at the least 3 times per week to learn the latest stuff you will have. And indeed, I’m also certainly motivated considering the astounding methods served by you. Selected 4 areas on this page are in reality the simplest we’ve ever had.

Leave a Reply

Want to join the discussion?
Feel free to contribute!

Leave a Reply

Your email address will not be published.