Millennials’ housing confidence and enthusiasm plummet to record low in latest ValueInsured Modern Homebuyer Survey
DALLAS, August 15, 2018 – Millennials’ perceived value in buying a home dropped below 50 percent, down significantly from post-Brexit high, according to the latest ValueInsured quarterly Modern Homebuyer Survey
A different picture of the housing market is presented by data from an April survey of just over 1,000 Americans. In contrast to more upbeat recent reports, including from Freddie Mac as reported here last week, the ValueInsured Housing Confidence Index for the second quarter dropped almost five points to its lowest level since the inception of the index in Q1 2016.
High home prices, unaffordability cause confidence in housing health to drop to lowest levels in nine quarters since inception of ValueInsured’s Modern Homebuyer Survey
The desire to own a home remains high, currently at 79 percent among non-homeowners, however; 67 percent believe the American housing market is unhealthy, according to the latest ValueInsured quarterly Modern Homebuyer Survey. In addition, the number of people who believe buying a home today is a secure and smart investment dropped to 52 percent. Despite reports of a strong sellers’ market, the decline in confidence is significant across the board among homeowners and non-homeowners alike.
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Despite consumer demand for housing remaining high, homebuyers' confidence in their ability to save enough for a down payment fell in the first quarter, with some feeling less positive than others.
Millennials in particular saw declining confidence toward down payment affordability, with only 35% of millennial first-time homebuyers claiming they can afford a down payment, according to ValueInsured, a Dallas-based down payment insurance company. This is down nine percentage points from a year ago.
Many lenders over the past few years have found themselves caught up in a "race-to-the-bottom" where technology and the "lowest rates" were king. This is a side-effect of a booming refi market that finally appears to be drying up. So what do lenders do now?
This WSJ article details some efforts many are taking at least at a high-level. Some are scrambling with more "exotic" loans types while others are repositioning themselves to get back to a traditional purchase operation. The challenge is that the infrastructure now in place - from systems, to 3rd party lead generation, to even the types of loan officers in place - are still in the quick and easy refi mode.
Earlier this week, a “rare bear” who caught national attention by accurately predicting the last housing crash in 2005 returned to the headlines. The famed money manager sounded the alarm that current housing "valuation extreme" looks a lot like it is 2005 all over. And he used the b-word, cautioning homebuyers are again in denial of a bubble just as they did before 2007.
There are no doubt both many bear and bull economists right now, each with their own opinions on the subject. But, to the non-economist homebuyers, this is all just more conflicting noise that impacts their confidence and decision making.
Affordability is by far the biggest barrier to homeownership for Millennials. This fiscally conservative generation is looking for greater value and flexibility from their dollar in everything they do - including housing. Through ValueInsured’s quarterly survey, we learned that even among Millennial non-homeowners who express an interest in buying a home “in the next few year”, the confidence that they could actually afford one they would like to buy continues to hover below 50%.
According to ValueInsured’s latest quarterly Modern Homebuyer Survey conducted in Spring 2017, 8 in 10 (81%) Millennial renters would like to buy a home, and 74% would like to buy “now” if they could afford to. So it’s certainly not a desire issue. However, affordability challenges aside, Millennials seem to lack the confidence that buying a home now is a sound decision.
