It could be the perfect time for millennials to stop throwing their money away on rent and buy a home — or not.
At 3.26 percent, the 30-year fixed rate mortgage set a new record last week, according to Freddie Mac. The last time home loans were in the low 3s was 2012 when the rate fell to 3.36 percent.
But there are several factors weighing against the 24- to 38-year old crowd getting a piece of the American Dream.
A survey by the Pew Research Center found one-third of millennials have been laid off due to the COVID-19. Another 42 percent said their pay has been cut, researchers reported. The poll of nearly 5,000 persons in those ages categories was conducted from April 7 to 12.
“There’s no question that millennials have been laid off at a higher rate because of the pandemic,” Jessica Lautz, vice president of demographics and behavioral insights at the National Association of Realtors (NAR), told PYMNTS. “But when we talk about millennials, they range in the mid 20s to 40 and that’s a huge spectrum with different levels of buying power. The hardest hit are the older millennials while the younger ones were hit by the last recession.”
Still, the largest generation of Americans also has advantages, she said.
For one, Lautz said, some have left their city apartments and returned to their parents’ suburban homes and are able to save money. In addition, all student debt has been placed on forbearance until October. Some who have been temporarily laid off are getting the extra federal unemployment benefits of an additional $600 a week for four months on top of their regular state unemployment benefits.
“The millennials who have a secure job or are furloughed have the advantage of paying down debt,” she said.
While the Pew survey revealed 69 percent of baby boomers said they expected things to improve, 57 percent of millennials said things would be no better or worse.
The other factor that is chilling home sales are prices.
While existing home sales fell 8.5 percent in March, the median home price for all housing types was $280,600, up 8 percent compared to March 2019 as prices increased in every region, NAR reported. March’s national price increase marks 97 consecutive months of year-over-year price gains.
Meanwhile, amid the pandemic, platforms are emerging to encourage the buying and selling of real estate online.