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Millennials Aren’t Deterred by Sellers Market

It is no surprise that the home market has favored the seller this buying season, but what is interesting is how millennials have treaded the challenging and sometimes expensive market. Ellie Mae’s April Millennial Tracker, which focused on mortgage applications from those born between 1980 and 1999 during a specific time frame, showed a steady increase in the percentage of home loans among the demographic to 89 percent in April, which is up from March’s 88 percent.

Millennials accounted for the majority of closed loans in five different metropolitan statistical areas (MSAs) in April. Bardstown, Kentucky (73 percent); Hobbs, New Mexico (71 percent); Dalton, Georgia (65 percent); Victoria, Texas (63 percent); and Appleton, Wisconsin (63 percent). In the Midwest and Southeast, millennials are settling in more affordable housing markets, however they are also settling down in the larger, more expensive markets such as New York, Chicago, Los Angeles, and San Francisco. These areas have seen an increase in closed home loans over the last three years.

“This new generation of homebuyers is making its presence felt across the country,” said Joe Tyrrell, EVP of Corporate Strategy for Ellie Mae. “Since the beginning of 2016, the percentage of millennials purchasing homes in the Bay Area has actually increased from 16 percent to 20 percent.”

Those aren’t the only major metropolitan areas seeing a boom in gen-y participation—Dallas is seeing increases from 21 percent in 2015 to 31 percent in 2017. Chicago saw slightly less from 22 percent to 31 percent and New York from 19 percent to 24 percent in the same period of time.

“In this purchase centric market, we anticipate a continued rise in more creative lending products to help increase millennials’ access to credit and continue to counter concerns that rising interest rates will stifle volume,” Tyrrell said.

The April data also showed millennial borrowers loan close time decrease from 43 days to 42 days in April. FHA loans were a popular loan type, comprising 35 percent of all loans closed. The average FICO score for millennials held steady from May at 720.

About Author: Brianna Gilpin

Brianna Gilpin, Online Editor for MReport and DS News, is a graduate of Texas A&M University where she received her B.A. in Telecommunication Media Studies. Gilpin previously worked at Hearst Media, one of the nation's leading diversified media and information services companies. To contact Gilpin, email [email protected].
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