In the face of challenging housing market conditions, including high mortgage rates and low affordability, younger generations are still determined to achieve the dream of homeownership. According to a survey by Bank of America, more than half of prospective homebuyers plan to either speed up their home purchases or stick to their original plans. Among Generation Z buyers and millennial buyers, 62% and 55%, respectively, still intend to buy a home.
While the desire for homeownership remains strong, there are significant obstacles to overcome. A survey by Redfin revealed that a majority of millennials and Generation Zers felt that high home prices and a lack of savings for a down payment were significant barriers. However, many of these individuals have not completely given up on their dreams and are willing to consider options such as working second jobs to fund their down payments.
The current high interest rates, with the 30-year mortgage rate over 7%, have also added to the challenges faced by homebuyers. These rates increase borrowing costs and discourage homeowners from selling their homes to move to new ones with higher mortgage rates. The combination of high rates and prices poses a significant challenge to potential buyers.
Despite these difficulties, there is hope on the horizon. Fannie Mae expects mortgage rates to drop to 6.7% in the fourth quarter and reach 6% by the end of 2024. However, Bank of America acknowledges the lack of predictability in the market and expects only a limited decrease in rates.
For those struggling with down payments, Bank of America suggests exploring down-payment assistance programs, which offer grants to buyers. City housing agencies, nonprofits, and lenders often provide these grants. For example, Bank of America offers up to $10,000 in down-payment assistance. However, buyers must meet certain eligibility requirements and obtain a home loan from the bank.
Other states, such as New York and Florida, also offer down-payment assistance programs for qualified buyers. In New York, qualified buyers can receive up to $100,000 in down-payment assistance, with specific requirements and attendance of a home-buyer education course. Florida’s ‘Hometown Heroes Program’ provides up to $35,000 in assistance for buyers who meet certain criteria, including working full-time with a Florida-based employer.
Despite the challenges, younger generations remain determined to achieve homeownership. By exploring down-payment assistance programs and seeking guidance from lenders, prospective buyers can improve their chances of realizing their dreams of owning a home.
Sources:
– Aarthi Swaminathan
– MarketWatch
– Redfin
– Fannie Mae
– Bank of America