They’re Ready, But Do They Know?
The National Association of Realtors – you may have heard of them – recently conducted a survey of renters who are 34 years of age or younger. Nearly all of those questioned say they want to own a home in the future. The NAR titled the survey Housing Opportunities and Market Experience – you read that right: HOME (points to their marketing department) – and it was designed to track topical real estate trends by asking consumers about two major topics: (1) whether or not it’s a good time to buy or sell a home, and (2) what are their expectations and experiences in the market. “Despite entering the workforce during or immediately after the worst of the financial and housing crisis, the desire to become a homeowner appears to be a personal goal for a convincing majority of young renters,” says NAR Chief Economist Lawrence Yun. The market conditions, according to Mr. Yun, are creating a “sizeable, pent-up demand for buying.”
According to the same survey, over half of renters who earn $50,000 or more annually have not tried but feel confident that they could succeed in obtaining a mortgage. Without a doubt, $50,000 is a sizable chunk of money, but here’s a bit of perspective: according to the Bureau of Labor Statistics, the median salary for women age 25-24 is $35,620; the median salary for men in the same age group is $40,560. Now, remember: “median” means the exact middle of a group. In this case of the information shared by the Bureau of Labor Statistics, this means that if you have 100,000 women between the age of 25 and 34, 50,000 of them make MORE than $35,000 – that’s A LOT of people who are confident that they could succeed in obtaining a mortgage. Now, there’s a second but closely related factor that needs to be considered.
Many people significantly lack a fundamental understanding about home-financing qualification criteria – this is especially true for renters who plan to buy a home within the next five years, according to a survey conducted by Fannie Mae’s Economic & Strategic Research Group. For example, many respondents thought the minimum down payment was 12% when Fannie Mae’s actual figure is 3%. As for minimum credit scores, many thought the requirement was above 650 for Fannie Mae – it’s actually a 620. We can go even lower than that, too!
Fannie Mae’s vice president of Applied Economic and Housing Research (what is it with these really long titles?), Mark Palim, observes, “Advancing from aspiration to sustainable home ownership is more likely to occur if consumers have an accurate understanding of the requirements to qualify for a home loan.” Thanks for that analysis, Captain Obvious!
All kidding aside, what are YOU doing to reach out to and let this new generation of buyers know homeownership is within their reach? We have some proven and successful ways to help – give us a call!