Updated: Sep 18, 2018
Matt Joy, Princeton Mortgage
It comes in waves. When things are good, our industry’s media publications produce enough fluffy content to make you sick to your stomach. Not like the fluey sick to your stomach, but the “I ate 2 bags of Fun Dip and a sleeve of Oreo’s” sick to your stomach. When things are bad (let’s just say tough because it’s not bad… or at least not that bad), our industry can create enough negative energy to make you want to wrap up in a blanket, hoodie, and sweatpants; lay on the couch; and try to connect every sad movie that’s on with your personal problems. I mean, c’mon!! Everything I’ve read this month makes you feel like you showed up to a sleepover and the friend that’s hosting is sick (I promise that was my last over-the-top pre-teen analogy).
CBS News ran an article essentially saying doomsday is near. They point to affordability, home sale activity stumbling, and (of course) the millennial generation giving up on the dream of homeownership. It’s true! Millennials are throwing up their arms all across the country and deciding to rent over buy. We saw an aggressive sellers’ market this summer. Home prices soared, and mortgage rates went up. Of course we saw a dip in sales!! Not only that, but the generation with the most buying power is swamped in student loan debt. That makes it easier to say, “I’ll rent. I don’t have the money saved for a down payment and, it’s much easier to come up with first and last month’s rent for a security deposit than 20% down for a house.”
CNBC reported that July’s rent vs. buy numbers showed that buying a home was cheaper than renting in only 35% of US counties. That’s down from 44% last year. They also claim that renting could be a better investment than buying as you can reinvest the savings to (you guessed it) pay down those pesky student loans. I can speak from my own experience when I say that renting over the past few years has allowed me to pay down my student loan debt and position me nicely for a home buying opportunity within the next few years.
This is nothing new. I’ve droned on about this topic time and time again. I’m sorry for dragging you down the rabbit hole again, but it’s a very big part of what’s going on with our current housing market.
A look around the market will show that the 10-yr is approaching 3% (currently at 2.967%), Movement Mortgage bought a bank, Caliber closed it’s 3rd “nonprime” security (speaking of doom and gloom… the industry is still closing and packaging nonprime loans) and the Fed is going to move rates… again.
Talk to you soon!
The opinions expressed in this post are the sole view of the writer and do not reflect the opinion of Princeton Mortgage Corporation.