According to First American’s Homeownership Progress Index (HPRI), the homeownership rate is still lagging behind potential demand. Experts attribute this subpar homeownership rate largely to the record low number of houses now available for sale on the market.
First American’s HPRI studies and analyzes the influence of myriad things like how lifestyle and societal and economic trends affect homeownership demand and the housing market in general.
Following an initial sudden drop upon the cusp of the pandemic’s emergence—during the second week of April—the number of mortgage applications submitted by hopeful homeowners shot up for nine weeks straight. In fact, the increase even surpassed the number of home loan applications from this same time last year.
For this reason, experts believe that housing may be the key to the recovery of the American economy from its current pandemic-related recession. Experts attribute this uptick in mortgage applications to a mixture of demographic and economic factors, particularly pointing to how the millennial generation may lead the march forward in the coming days.
The reason why the experts are pointing to the millennial generation as possible leaders forward are that the data reveals how millennial households are shown to be the ones propelling the increase in demand most. Other factors that experts attribute to higher demand include the ability to make solid bids thanks to wage growth and record-low mortgage rates.
According to First American, the potential homeowner demand is only expected to increase, even amid the current economic struggle resulting from COVID-19. Millennials, thanks to their vastness in number, their diversity, their higher education levels (upon average), and more, are presumed to lead the way (to) home.
In a prior report, Mark Fleming, Chief Economist, First American Financial, said he is banking on the belief that Millennials will rally and overcome these obstacles: “According to a 2019 survey, 88% of millennials believe homeownership is important for personal success, and there are signs that millennials will continue to be a driving force in homeownership demand. It appears millennial homeownership has been delayed, not denied.”