Owning a home may have the edge over renting for many, according to a new report by TransUnion. The analysis found that 55 percent of people who shopped for a mortgage during the first quarter of the year were non-homeowners. Translation? Unless they were living rent-free with their parents or couch-surfing with their friends, this pool of people was transitioning from renting to homeownership!
Quite the leap of faith, given rising interest rates, which confirms what I’ve said all along: there will always be blips in the real estate and economic cycles that cause the industry to temporarily dip, but solid fundamentals, high-quality products and an unbeatable work ethic will always prevail. Trust me, I’ve been in the mortgage industry long enough to know this is true.
Making the Investment
When you hear non-homeowners account for 55 percent, you may be thinking “big deal.” Yes, yes it is a big deal. That’s because only 50 percent of those mortgage shoppers were non-homeowners a year earlier, while only 45 percent were in this same category in 2015 – when rates were much lower!
Mike Doherty, senior vice president of TransUnion’s rental screening solutions group, further elaborates on this phenomenon, which has caused growing concern for apartment leasing agents and managers.
“The rental market has seen sustained growth for the last several years, but occupancy rates have flattened from their peak in the second quarter of 2016,” he noted. “This new uptick in mortgage shopping could be a precursor to further declines in occupancy, which would impact rent growth – and ultimately, revenue – for multifamily property owners.”
Millennials Buy In
One industry’s misfortune is another’s boon, and that’s the way we’re feeling now! We already know many Millennials have seen the powerful value that can come with owning your own home – and they’re one of the hardest populations to convince of anything! If a generation known for flexibility, short-term commitments, its love of small, urban dwellings and its propensity to travel believe that putting their hard-earned money toward a permanent dwelling for the next 30 years can yield huge benefits, then the pendulum must have indeed swung our way.
Sure enough, the study confirms what we already knew (and covered in the blog months ago). Millennials accounted for three out of every 10 (29 percent) non-homeowners who shopped for mortgages in 2017. This is up slightly from 28 percent in 2016 and 27 percent in 2015.
Another great takeaway is that 34 million renters between ages 25 and 44 –a prime age range for homeownership – were credit-eligible for a mortgage. The apartment market is definitely experiencing some shortfalls as brand-new, resort-style high rises price out many renters, while others are tired of living in a stucco-clad, 1960s-era, garden-style development that hasn’t seen a new coat of paint in more than a decade. Luckily for them, there is another solution. And we’re just the people to provide it.