Youth Leading the Housing Charge

by Tim McLaughlin, Senior VP, Weichert Financial

Millennials and Generation X Americans reportedly place a higher value on homeownership than their older counterparts, a survey found.

While 96% of the survey respondents said homeownership was important, it was ranked as “very important” by 77% of those between 25 and 34 and 78% of those between 35 and 44.

The survey was conducted between Dec. 5 and Dec. 15 with the sample consisting of people between 25 and 64 who either recently bought or sold a home or they said they were considering buying or selling a home.

Millennials and Generation X, about 85 million people strong, face a unique opportunity in US housing; they are generally optimistic about homeownership and, by nature, share a strong sense of community. As important, many were not impacted by the real estate downturn and are looking at today’s buying opportunities with keen interest.

Right now, 63% of those surveyed said they had a favorable or somewhat favorable perception of the residential real estate market right now, with younger people more likely to have a favorable opinion than older ones.

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What is driving the bond market selloff over the past couple of weeks?

Investors seem to have turned to offstting factors that encourage risk taking, thus “profit taking”/selling of safe U.S. Treasuries and Mortgage Backed Securities with the reallocation of those funds into higher risk assets:  Corporate and Junk Bonds, Hedge Fund Allocation, and Equities in general.  The Dow Jones alone is up a whopping 6.5% in the first five weeks of 2013.

U.S. economic data is improving month over month, fears over China’s economy deteriorating are fading and the European Central Bank’s bond-buying program deters investors from attacking the sovereign debt market in Spain and Italy. All those factors have contributed to more global economic confidence, and with that, a reallocation of investment funds.

However, 30 year mortgage rates still have a “3 handle”, and 15 year rates are still in the high 2% range with points, so still an excellent time to procure financing near the lows.