It appears that Millennials are finally beginning to enter the housing market. In a recent report, CoreLogic looked at the annual net change in household formations over the last decade (see graph below): It appears this is the year that Millennials are finally moving out of their parents’ basements and finding a place of their own. And they are not all renting According to the National Association of Realtors’ latest Existing Home Sales Report, the percentage of first–time buyers rebounded to 32 percent in August, up from 28 percent in July and matching the highest share of the year set in May.
What has kept the others from buying a home?
Recent surveys have revealed that there are major misunderstandings as to what is required to get a mortgage in today’s lending environment. Many Americans believe you need at least a 780 FICO score and a 20% down payment. In reality, neither is required. Here are the mortgage statistics (FICO score, % of down payment, mortgage interest rate and debt-to-income ratio) for Millennials who have completed the mortgage process in the first half of this year according to realtor.com:
More and more Millennials are beginning to enter the housing market. As they begin to better understand the mortgage process, we will see even greater numbers buying a home.