Affordability blocks home buying millennials, but that's slowly changing
Eighty percent of millennials said they plan on moving within the next five years, while nearly three-quarters claim affordability as their biggest hurdle in the buying a home.
However, relief in home prices could be on the way. Although appreciation was up 5.6% year-over-year in September and increased 0.4% from August, it's expected to fall to -0.6% in October and decrease to 4.7% in September 2019, according to CoreLogic's home price index.
"Our consumer research indicates younger millennials want to purchase homes, but the majority of them consider affordability a key obstacle," Frank Martell, president and CEO of CoreLogic, said in a press release. "Less than half of younger millennials who are currently renting feel confident they will qualify for a mortgage especially in such a competitive marketplace."
As summer and fall's rising mortgage rates hurt home affordability, the declining price appreciation will help counterbalance that. The biggest swings should be coming to some of the most expensive housing markets as well.
"The erosion of affordability in the highest-cost markets has begun to slow home price growth. Hawaii, California and Massachusetts had median sales prices above $400,000 this summer, the highest in the nation, while annual home price growth slowed steadily between June and September in these three states," CoreLogic Chief Economist Frank Nothaft said in the press release.
"When comparing September 2018 with September 2017, annual price appreciation slowed more in these states than in the U.S. overall. Nationally, annual price growth slowed 0.5 percentage points. However, in Hawaii, California and Massachusetts growth rates decreased by 1.7, 0.7 and 1.0 percentage points, respectively," Nothaft continued.