Millennials Are Eagerly Awaiting A Housing Crash In Order To Afford Homes For Them And Their Families
Millennials are eagerly awaiting a for a housing crash in the US. The insane housing market has squeezed nearly 3 million millennials out of the market. This is due to an overinflated housing market and rising interest rates designed to slow inflation.
Millennials see a housing crash as the only way to buy a home. They anticipate aging Gen-Xers and elderly baby boomers going into panic mode when price begin to drop.
The Federal Reserve has increased rates twice this year. They are also expected them 6 more times by the end of 2022. This has lead to more millennial angst.
Housing affordability has fallen dramatically as a result of the pandemic. House prices rose more quickly than incomes. At the same time, more people were buying second homes with their increased equity. This caused a jump in cash transactions.
Investment groups have also jumped in to take advantage of rising prices. thus, contributing to the surge in values.
The NAR estimates investors make up 22% of buyers across the US. This compares with 15% a year ago. All-cash offers account for 27% of purchases against 19% in early 2020. Conversely, the share of purchases by first-time buyers fell to 27% from 33% last year.
Housing affordability is plummeting. However, that doesn’t mean Americans are likely to lose their homes if the real estate bubble bursts.
Still, many homebuyers remain frustrated at the situation.
Millennials Are Eagerly Awaiting For Something That May Not Come
Supply chain problems are contributing to the falling margin of affordability.
Post-pandemic supply problems have made the availability of homes for middle-class buyers fall 60%. This translates as one affordable listing for every 125 households. This compares to one for every 45 households in 2019.
Millennials also face another unexpected hurdle. Sellers wanting to do unpaid rent-back agreements. This is where sellers demand to live in their home after sale rent-free until they find a new property.
NAR economists say the only solution is for a strong push to build more houses in the US. They say this is to accommodate a growing market of priced-out Americans. Until then, growing numbers will continue to fight for a shrinking stock of homes.
However, this is an expected answer from the NAR. After all, it’s in the NAR’s best interest to encourage more home construction. More homes means more real estate sales commissions.
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