According to Fannie Mae’s National Housing Survey, younger renters between ages 18 and 39 dream to be homeowners in their relatively near futures, but economic realties are getting in the way–a situation that’s noticeably impeding the housing market’s recovery process. According to U.S. Census statistics, the demographic’s new home purchasing fell from 65.2% in 2013’s fourth quarter to 64.8% in 2014’s first quarter.
According to Sarah Shahdad, a Fannie Mae strategic planning analyst, obstacles like staggering student loan debt, lack of savings, and less-than-perfect credit are holding Millennials back from being able to enter the housing market. Additionally, Millennials are waiting longer to get married or have kids, which means they’re essentially delaying life events that would motivate them to buy a house.
This all is being noticed at a time when economists thought the housing market would be rebounding joyfully. Instead, sales are falling everywhere. Compared to 2013, sales in March fell by 7.5%, while new home purchasing fell 14.5% in February. This isn’t to mention the fact that mortgage applications are down by astounding 21% either.
Meanwhile, as the Federal Reserve reduces its bond-buying program, mortgage interest rates are beginning to rise from the record lows that they were at. Additionally, big investors like hedge funds have reduced their rental home purchases, as well.
“The very-low-rate environment and the high level of investment activities really masked how weak the housing market was,” says CoreLogic’s deputy chief economist Sam Khater. “Once it goes back to the normal owner-occupied purchase market, you really realize how weak the market is.”
Though Millennials would like to be homeowners some day, there’s a long, steep road ahead.