Data show that 20-40 year olds represent the most significant opportunity in the housing market today.
Purchase activity by millennials is rising, according to the Ellie Mae Millennial Tracker.
Census data indicate some 4 million millennials will reach age 29-30 each year for the next several years, which is important because that is the average age this generation enters the home buying market, said Ellie Mae Chief Operating Officer, Joe Tyrrell.
“Millennials represent the single biggest opportunity in the housing market today,” he said.
Purchase share—the percentage of all loans closed for purchases—grew for the second straight month, reaching 56% in June, up nine percentage points from May. This marks the highest purchase share since March 2020, according to Ellie Mae.
According to Ellie Mae data, in Q2 2020, millennials were responsible for more closed purchase loans than any other generation.
Tyrrell goes on to say that millennials are emerging as a “dominant force” … “driving the market forward.”
The boom is just starting, he says.
“We expect that their entry into the market, as they reach prime homebuying age, will fuel purchase transactions in 2021, 2022 and 2023.”
More in-depth data show that during June, millennial purchasing power grew as the average interest rate for all loans closed by this generation fell to a new Ellie Mae Millennial Tracker low of 3.36%. The previous low occurred just one month prior, when the average rate dropped to 3.42%.
Average time to close on all loans increased from 43 days in May to 45 days in June. Time to close for refinances jumped five days—from 44 days to 49—during this time. Average time to close has risen month-over-month during every month since March.
Tyrell also pointed out the importance of digital mortgage technology.
“Capabilities like online applications, automatic updates and eClosing offer millennial customers the seamless digital experiences they expect while freeing up time for the human interaction necessary to answer questions or concerns they may have as they navigate the homebuying process for the first time.”
Ellie Mae’s Millennial Tracker divides millennials into two groups: older millennials —borrowers between 30 and 40 years old, and younger millennials—borrowers between 21 and 29 years old.
Average interest rates were nearly identical for the two groups, with younger millennials securing an interest rate of 3.35%, on average, compared to 3.34% for older millennials. Younger millennials also had a lower average FICO score, as this sub-group gravitated toward FHA loans, which have less stringent credit requirements.
Millennials in their 20s were more likely to buy homes in June. Their share of purchase was 78%, compared to 47% for older millennials, who are more likely to already own a home and seek to refinance.