The next great American housing boom is here!
A recent article in Forbes cites a couple of very interesting factors contributing to a resurgence in the United States housing market in the heart of a pandemic.
Demographics Are Changing
One of the factors they contribute this growth to is demographics. According to the National Association of Realtors, the average first-time home owner is 31 years old. If you look at the graph below, you can see the average millennial is turning 33 years old this year. Millennials are one of the largest generations, and they are ready to buy homes after a period of resistance. They’ve stayed renting longer than any other generation, and after being locked up with stay-at-home orders have decided the 600-square-foot apartment just simply isn’t going to do and now is the time to buy a home.
Supply Is Low
This demographic and sociological shift is happening after a long period of home builders not being able to keep up with increasing demand. According to the Census Bureau, the average number of homes built in the United States every year from 1959-2009 was 1.5 million.
That is not the case today. If we look back over the last decade, from 2010 to 2020, we can see home builders have only averaged 900,000 yearly housing starts. This is not enough inventory to meet the rush of demand from the demographic shift.
Homes Are More Affordable
Last but not least we’re seeing record-low interest rates. When it comes to figuring out affordable a home is for a buyer, there are three questions that must be asked:
- What is the price of the home?
- What is the interest rate and, consequently, the monthly payment?
- How much income does a borrower have?
Let’s break these down. While home prices have been steadily increasing, average incomes have been as well. Combine this with interest rates at all-time lows and we have a housing market that is more affordable than almost any other time in history (excluding the mortgage-meltdown period where both interest rates and housing prices were low).
Conclusion
This is a great time to buy a home!
If you are in a position to buy a home this year, now is the best time to start preparing. Fill out the form below to request a consultation with one of our experienced mortgage professionals. We are ready to answer your questions, guide you through the process, and deliver a home-buying experience that is simple, low-stress, and fun.
