The recent dip in mortgage rates is seeing many Americans deciding to take their first plunge into home buying. One big trend we are seeing is a huge spike in first-time homebuyers! Freddie Mac is reporting of all their 2019 mortgage loans they purchased, a whopping 46% stem from first-time buyers! That translates into an astounding twenty-year high for Freddie Mac.
“Despite the economic slowdown due to weakening manufacturing and corporate investment, the consumer side of the economy remains on solid ground,” said Sam Khater, Freddie Mac’s Chief Economist. “The fifty-year low in the unemployment rate combined with low mortgage rates has led to increased homebuyer demand this year. Much of this strength is coming from entry-level buyers – the first-time homebuyer share of the loans Freddie Mac purchased in 2019 is forty-six percent, a two-decade high.”
A recent survey focusing on Generation Z (18-24-year-olds) by Homes.com found that the top reasons for them to buy were because they want to have a ‘place to call home’ and also saw it as a good investment value. The fact that approximately half of Gen Z want to buy because they believe owning a home is a good investment reflects how far the wealth-building aspects of homeownership have rebounded since the housing crash of 2008 when less than 1% of first-time buyers said financial security was their main purchase motivator. Another reason to buy residential property for Gen Z is to ensure they have a good home for their pets, which believe it or not actually outranked safety and a sense of community as key buying incentives.
Another huge home buying population segment emerging is single women according to the National Association of Realtors. Currently, they are the country’s second-largest group of homebuyers, many being millennial women. Meanwhile, young baby boomer women are even more likely to take the property plunge, with 25 percent of female homebuyers being between the ages of 54 to 63 in 2018.
For those looking to buy their first home and want to increase their chances of landing their dream home, they should get their mortgage pre-approved before shopping around. Don’t forget, it’s a competitive real estate jungle out there. Just because someone makes an offer that meets the asking price, don’t assume that the offer will get accepted. A very much sought after prime property can and often will go above and beyond the asking price, so homebuyers beware and keep that in mind when making an offer.
The low mortgages is also creating a big demand when it comes to loan refinancing. Refinance activity is up a whopping 163% higher compared to a year ago, according to the Mortgage Bankers Association’s most recent report. The 30-year fixed-rate mortgage (FRM) averaged 3.57 percent, down 8 basis points for the week ending October 10, 2019, according to a recent Freddie Mac report. Compared to last year, it’s a big difference with the 30-year FRM averaged 4.9 percent.