- Millennials are finding it tough to buy their first home.
We typically hear that the main obstacles keeping many millennials from entering the housing market are student loan debt, stricter credit standards and escalating rents that make it difficult to save for a down payment. Additionally, the typical cry from the real estate sector is that there's not enough inventory and that more homes need to be built. While that's all likely true for starter homes, an interesting article by Brena Swanson recently appeared on HousingWire, with data offering a slightly different perspective.
The first factor the article considered was that people are moving less and staying longer in the same home. According to the article, the average home tenure in 2007 was 4.08 years, but in 2016 it was 7.88 years. People selling less frequently and staying longer (almost twice as long) in their homes definitely lowers new inventory. The second factor was that many people have refinanced their homes at much lower interest rates and don't want to go out and pay more. The article cites the recent increase in interest rates following the election, and the consensus seems to be that rates will continue to rise.
The third factor was that investors are buying the starter-level homes and creating more competition for the few entry-level price range homes available. Many of these investors are cash buyers, making it difficult for a homebuyer who would take out a loan to get an offer accepted. Loaning buyers need 45 to 60 days to close on a loan, while a cash investor can close almost immediately.
Housing affordability is a complex issue to solve and remedies to the crisis will need to address all the factors in the equation. Both locally and nationally, home prices are increasing faster than wage growth, not enough existing homes are being sold and builders are not meeting the rising demand. Higher home prices, low inventory, rising mortgage rates and relatively stagnant wages are only adding to the housing affordability crisis. Unfortunately, it's all getting worse with inventory continuing to dip.
66925 Central St., Bend, OR 97703
2 beds, 2 bath, 1,232 square feet, 2.23 acre lot
Built in 1995
Listed by Becky Breeze P.C.
61108 SE Stari Most Loop, Bend, OR 97702
3 beds, 2.5 baths, 2,120 square feet, .09 acre lot
Built in 2017
Listed by Hasson Company Realtors
3429 NW Bryce Canyon, Bend, OR 977003
4 beds, 3 baths, 3,184 square feet, .24 acre lot
Built in 2016
Listed by The Associates Realty Group
Photos and listing info from Central Oregon Multiple Listing Service