Every day, Mike Hardwick, the founder and CEO of Churchill Mortgage, spends a few hours reading and then emailing the leaders in his organization. I am a beneficiary of that discipline as he sends valuable mortgage and personal finance articles my way.
Thank you, Mike!
Yesterday he came across an article from NPR.com that speaks of millions of young people – singles and newly married couples in their mid to late 20s – who would normally at this point in life be jumping in as first-time home buyers. They traditionally pick up the homes of the last decade’s 20-somethings as they move on to bigger and better housing.
That was yesterday.
Today a different story is emerging, one where easy college debt and painful memories of the housing crisis have given pause to this group, who are, by and large, underemployed and jaded.
Who would blame them for waiting to buy a home? This article synopsis might be concerning unless, like me, you trust the free market to work this all out in time.
There are 2 million “missing households” in the U.S. representing pent-up demand for new residences. These are millennials who are living with their parents or rooming together in apartments. That represents 2 years of housing starts at the current pace. Rents are increasing, jobs are tough to get, and student debt is high. Fun fact: we haven’t built so few homes since World War II, according to the NAHB.
But consider a few encouraging ways to look at this situation, ways that we just never see in the media’s spin:
First-time buyers have really great opportunities right now with lower home prices and very low rates. A 15-year fixed mortgage on a home right now mirrors the payments of a 30-year loan on that same home 6 years ago.
Folks who want to move and keep their old home are having an easier time renting out their old home than ever before.
In a few years, these would-be buyers will spill into the market along with the 20-somethings of the next decade. Prices of homes, existing home sales, and home building will rise to meet the demand again.
Don’t be fooled by seemingly neutral stats. Nothing is neutral, and media spin is rarely given with the hopes of helping you.
Look at this situation through a better lens – the free-market lens – and profit from it.