First-time homebuyers will be a force in the market this year after several years of retrenchment, according to Realtor.com’s recent housing forecast for 2015.
The forecast included predictions for home prices, home sales, mortgage rates and affordability.
According to the forecast, both population and households grew at a slightly higher pace in 2014, and the trend will continue this year.
Realtor.com said households headed by millennials would experience significant growth as a reflection of economic gains, and would drive two-thirds of household formations over the next five years.
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The addition this year of 2.8 million jobs and increased household formation would be key factors in first-time buyer sales, it said.
“The residual financial effects of recession-driven job losses and subsequent unemployment have impeded millennials’ entry into the home-owning market,” realtor.com’s chief economist, Jonathan Smoke, said in a statement.
“In 2015, increases in employment opportunities will empower younger buyers to return to the market and fuel the continued housing recovery. If access to credit improves, we could see substantially larger numbers of young buyers in the market. However, given a high dependency on financial qualifications, this activity will be skewed to geographic areas with higher affordability such as the Midwest and South.”
The New York Times reported Thursday that President Barack Obama would propose lowering insurance rates on federally issued mortgages to first-time homebuyers, minorities and other financially strapped Americans in an effort to stimulate the housing market.
Some observers have a different perspective on millennials’ appetite for home buying. “Renting is more appealing across all age groups, all parts of the U.S.,” DoubleLine Capital’s chief executive Jeffrey Gundlach said in May. He has echoed that sentiment several times over the past months.
“This is a generational preference,” he said. “All young people are scarred by the housing crash, and they don’t think current interest rates are low.”
As well, Gundlach said, many potential new homebuyers are weighed down by onerous student debt.
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