Dana Anderson and Sheharyar Bokhari of Redfin report on homeownership rates, noting that Gen Zers (born between the late 1990s and the early 2010s) are tracking ahead of their parents’ homeownership rate. According to their data, 30% of 25-year-olds owned a home in 2022, higher than the 27% rate for Gen Xers when they were that age. Further, the data shows that Millennials buy more homes than other generations, with 25-44 year-olds purchasing 60% of homes sold over the last few years.
Source: Redfin (April 2023)
Redfin Chief Economist Daryl Fairweather commented on the data:
“Millennials have been financially unlucky. Their parents had a more straightforward financial journey…The oldest millennials entered the workforce during the 2001 recession. Then came the 2008 financial crisis, with many millennials in their first post-college job. It limited their earnings, overall wealth and ability to buy a home for many years afterward. Millennials started to gain homebuying momentum just before the pandemic, but they were once again dealt a bad hand with pandemic-related job losses in April 2020.”
The report concludes that those Gen Zers who purchased in the past few years could feel the pinch of higher interest rates. This reality is exacerbated by Gen Zers having more student debt than Millennials, making them even more susceptible to rate increases.
Rose Quint of the National Association of Home Builders (NAHB) reports on some work-from-home (WFH) data, showing that 30% of American adults work at least two days from home per week. “[T]he three demographic characteristics that make the biggest difference are generation, income and education level. While 45% of millennials, 35% of Gen Zers, and 31% of Gen Xers can work from home at least twice a week, the share is only 15% among boomers.”
Source: NAHB (April 2023)
Jesse Wade also of NAHB reports on interesting demographic shifts, noting that in 2022 Florida witnessed the most migration of any state, highlighting that the state hasn’t seen any population declines since 1946. Wade notes that this will undoubtedly buoy the housing market.
“Looking at the population growth…Naples-Immokalee-Marco Island had the highest median growth rate over the past 41-years at 4.14% making it the only MSA of the ten to have a median population growth above 4.0%. The Villages had the second highest population growth rate was at 3.92%. Crestview-Fort Walton Beach-Destin was the only MSA of the ten to have a median population growth rate below 2.0% at 1.93% between 1980-2021.”
James Rodriguez of Business Insider reports on some National Association of Realtors (NAR) data showing that between July 2021 and June 2022, Baby Boomers made up the largest share of homebuyers for the first time since 2012. In all, Baby Boomers bought 39% of homes sold, an increase from 29% year-over-year. Millennials purchased 28% of homes during the same period, down from 43% the previous year.
Source: Business Insider (April 2023)
Spring selling season
We’re off to a reasonably slow start to the typically busy spring selling season, according to Nicole Bachaud of Zillow. According to NAR data, Zillow reports that 4.4 million existing homes were sold in March, down 2.4% month-over-month and a decrease of 22% year-over-year. By the end of March, total housing inventory sat at 980,000 units, equivalent to just 2.6 months of supply. The median price for all homes sat at $375,700, down 0.9% year-over-year.
Dana Anderson of Redfin reports a similar drop in home prices, noting that the median home sale price decreased 2.6% year-over-year, the most significant decline in over a decade. Similarly, pending sales are down 19% year-over-year during the typically busy spring season.
Source: Redfin (April 2023)
Redfin Deputy Chief Economist Taylor Marr notes:
“Homebuyers are window shopping and many are entering the store, but few of them are making it to the cash register yet…There’s not much on the shelves to choose from, and high mortgage rates and still-high prices are making homes too expensive for many buyers. Some buyers are discouraged by mortgage rates rising this week, which is partly due to stronger-than-expected bank earnings making it more likely the Fed will hike interest rates next month.”
Danielle Hale of Realtor.com reports on pending home sales, noting that the “pace lagged the March 2022 pace by a significant 22.0%. However, despite slowing for the month, the 4.44 million pace of home sales remains convincingly above the recent 4 million sales low reached in January, just 2 months after mortgage rates registered above 7%.”
Unsurprisingly, Diana Olick of CNBC reports a similar drop in mortgage demand, highlighting the slow pace of home sales. Reportedly, mortgage applications to purchase dropped 10% week-over-week last week, with refinances decreasing 6% week-over-week and dropping 56% year-over-year.
Delinquencies & Foreclosures
Black Knight reported last week that it saw a decline in national mortgage delinquencies, showing a strong decrease of 15% in March. This is the first time on record that mortgage delinquencies fell below 3% of overall loans, currently at 2.92%. Further, “[s]erious delinquencies (90+ days past due) showed marked improvement, falling by 51K to their lowest level since March 2020, with volumes shrinking in every state.”
That said, according to a new foreclosure report from ATTOM Data Solutions, foreclosures are slowly increasing nationally. There were 95,000 properties with foreclosure filings during Q1 2023, up 6% quarter-over-quarter and up 22% year-over-year. This could be a lagging effect of pandemic foreclosure and eviction bans, however, the rates are still at historical lows.
Source: ATTOM Data Solutions (April 2023)
Rob Barber, CEO of ATTOM Data Solutions comments on the data:
“Despite efforts made by government agencies and policy makers to try and reduce foreclosure rates, we are seeing an upward trend in foreclosure activity…This unfortunate trend can be attributed to a variety of factors, such as rising unemployment rates, foreclosure filings making their way through the pipeline after two years of government intervention, and other ongoing economic challenges. However, with many homeowners still having significant home equity, that may help in keeping increased levels of foreclosure activity at bay.”
Of note, the states that had the greatest rate of foreclosures in Q1 2023 are California (6,867), Texas (6,764), Florida (5,724), New York (4,345), and Illinois (4,006). Further, the major metros with a population of 200,000+ that had the highest number of foreclosures in Q1 2023 included New York City (4,674), Chicago (3,549), Los Angeles (2,210), Houston (2,120), and Philadelphia (1,985).