Biggest takeaways from MBA Annual 2019
The outlook for 2020 through 2022 has the largest three-year projection of first-time homebuyers since the Great Recession, according to a study by TransUnion.
The high end of the forecast shows 9.2 million originations from first-time homebuyers in those three years. By comparison, 2016 through 2018 had 7.64 million and 2019 projects 2.7 million.
“Home prices are going to continue to go up, but at a slower pace than they’ve been,” Joe Mellman, senior vice president and mortgage business leader at TransUnion, said in an interview. “The two biggest things are unemployment is at a near all-time low and we’re finally starting to see wages increase more than inflation. That’s a trend that just started recently and we’re expecting it to continue in the near future. The last piece is interest rates are expected to remain low, and that’s always good for first-timers.”
Millennials and upcoming Gen Z buyers express home owning aspirations, driven by traditional motivations. Nearly 45% of those surveyed wanted increased privacy, 44% want to build their equity and wealth, while about 24% want to purchase because they’re planning to get married.
However, the supply of affordable housing is lacking with builders focusing on more higher-end homes. There is also a knowledge gap with prospective borrowers.
“Many of our potential first-time home buyer respondents don’t seem to be aware of the wide variety of financing options available to them,” Mellman said. “There’s a big opportunity for lenders to really educate these consumers.”