Rule change boosts Arizona Realtors' confidence in millennials buying homes
October 23, 2019 at 9:32am | Mark Sloat CFP
Phoenix Business Journal
By Julian Hernandez – Contributing writer
Valley real estate agents are optimistic that a change in Federal Housing Administration rules will help financially stressed millennials buy their first homes.
D. Patrick Lewis,
president of the Arizona Realtors Association,
said changes to the types of homes that qualify for FHA-insured loans will help millennials who are searching for affordable options.
Rule changes that went into effect Oct. 15 will allow the FHA to insure mortgages for units in condominium projects not previously approved by the administration. Known as “spot approvals,” the process is returning after being banned in 2010.
Loans insured by the FHA can be more attractive to potential homeowners with low incomes and poor or non-existent credit, as they often require lower down payments than conventional mortgages.
Before millions of Americans defaulted on their loans leading up to and during the subprime mortgage crisis of 2007, the national homeownership rate for those under 35 years old hovered around 43% for several years, according to Census Bureau
Data for homeownership rates specifically among millennials, defined by the Pew Research Group as those born between 1981 and 1996, is hard to quantify. The national homeownership rate for those under 35 years old was at 36.4% during second-quarter
2019, according to Census Bureau data. A 2018 study by Haven Life Insurance Agency estimated homeownership rates in the Phoenix area for those under 35 to be about 28%, well below the national average of 34.5% at the time.
A 2019 report by lendEDU, a consumer finance education company, found that 25% of millennials who didn’t own a home but wished to own one said low income was preventing them from becoming homeowners. More than one-quarter said a lack of savings was
their biggest issue, and 17% identified poor credit as their major roadblock.
“We consider six months to be a balanced market,” Patrick Lewis said.
Despite the market's housing shortage and financial roadblocks, Flucke said millennials in Phoenix are not feeling discouraged from purchasing homes.
Flucke said while millennials occupy an age range that represents people at different stages of their lives, what Flucke found constant among them was their confidence in the economy and their ability to buy a home.
“Because of that, we’re targeting millennials,” Flucke said.