Today's younger home buyers are leading the pack in home sales in the middle regions of the country, according to Ellie Mae's latest Millennial Tracker.
"As housing prices continue to rebound, millennials are increasingly representing a higher percentage of homeowners in the middle of the country," says Joe Tyrrell, executive vice president of Corporate Strategy at Ellie Mae, as quoted in a report by the National Association of Realtors.
"Meanwhile, cities in California and Florida saw the least millennial home buying activity this fall, including Los Angeles, Miami, San Diego, San Francisco, and Tampa-St. Petersburg."
Here's a profile of the millennial home buyer based on the latest readings from the index:
"About half of millennial borrowers are nearly 29 years old. About half were single and half were married (which reflects a growth in single homeownership). Their FICO credit scores averaged 722.
"They are able to afford a pricier home than they were six months ago. The average appraised value of a home bought by millennial buyers has jumped from $212,939 in June to $223,153. More than three quarters of closed loans for millennials were purchases, and 22 percent were refinances. The average loan amount was $184,733."
Q: Are home values rising rapidly?
A: Yes, in fact home prices are rising at a rate not seen since 2006. In November, national home values rose at their fastest annual pace since 2006, near the peak of the housing bubble, according to a Zillow Real Estate report.
"Rents, which were the big story of 2016 as they rose at a record pace, have slowed considerably to a 1.5 percent annual appreciation rate; this rate is expected to continue into 2017. The median monthly rent payment in the U.S. is now $1,403.
"Home values were 6.5 percent higher this November than last. Strong growth is especially evident in a handful of new powerhouse markets, including Seattle, Denver, Portland and Dallas, whose strong job markets attracted new home buyers over the last year."
Q: Are mortgage applications increasing?
A: Yes, mortgage applications increased 2.5 percent from one week earlier, according to data from the Mortgage Bankers Association's Weekly Mortgage Applications Survey in its most recent report.
"The refinance share of mortgage activity increased to 57.9 percent of total applications from 57.2 percent the previous week. The adjustable-rate mortgage share of activity increased to 6.5 percent of total applications, its highest level since February 2016. The average loan size for purchase applications reached its second-highest survey level at $312,000."
Q: Will more new homes be built in 2017?
A: At this point, it looks like there will be fewer new homes. This may press housing shortages even more in the new year, according to a report by the National Association of Realtors.
"Housing production — which includes multifamily and residential — posted a sharp decline in November, dropping nearly 19 percent month-over-month.
"Overall housing production is now at a seasonally adjusted annual rate of 1.09 million units, the Commerce Department reports. Permits — a gauge of future homebuilding — were also down in November, dropping 4.7 percent."
Q: Will mortgage rates rise in 2017?
A: Here's a quote from a mortgage leader:
"As was almost-universally expected, the FOMC (Federal Open Market Committee) closed the year with its one-and-only rate hike of 2016," says Sean Becketti, Freddie Mac's chief economist.
"The consensus of the committee points to more rate hikes in 2017. However, the experience of this year combined with the policy uncertainty that accompanies a new Administration suggests a wait-and-see outlook. … If rates continue their upward trend, expect mortgage activity to be significantly subdued in 2017."
Jim Woodard's email: [email protected]
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