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MortgagePoint » Your Trusted Source for Mortgage Banking and Servicing News 78 April 2024 J O U R N A L design and the additions that homebuy- ers decide to make, such as building an island that resembles furniture, better cabinetry, or more costly flooring. HALF OF ALL MORTGAGES ARE GOING TO MILLENNIALS T hough millennial homeowner- ship confidence may be low, as many believe they are doomed to live in their parents' basements—or be forever renters—new data from Lending- Tree shows that in 2023, half of the year's mortgage offers on their platform went to millennials. The millennial generation (now aged 24-42) snapped up 53.85% of all mortgag- es including some for homes in the most expensive areas of the country, like San Jose, California. Key Findings: » Across the nation's 50 largest metros, 53.85% of mortgage offers in 2023 went to millennials. Millennials received more than 50% of all mortgages offered in 35 of the nation's 50 largest metros. » Millennials made up the largest share of potential homebuyers in San Jose; San Francisco; and Boston. In San Jose, some 64.75% of mortgages in 2023 were offered to millennials. That's up slightly from 63.57% in 2022. In San Francisco and Boston, the 2023 figures were 62.77% and 61.46%, respectively. These figures increased from 59.18% and 60.59% in 2022. » Millennials in Las Vegas, Phoenix, and Tampa, Florida, made up the smallest share of potential buyers—though still substantial. In Las Vegas, 40.76% of mortgage offers in 2023 went to millennials. In Phoenix and Tampa, those figures were 44.31% and 45.16%, respectively. These figures were lower than in 2022, when they were 41.92%, 46.11% and 48.71%. » Millennials in expensive California metros San Jose, San Francisco, and Los Angeles planned to put the largest down payments toward their homes. The average down payments among potential millennial homebuyers across these three metros in 2023 were $170,591, $159,392 and $111,068, respec- tively. For comparison, down payments among potential homebuyers were the smallest in Virginia Beach, Virginia; San Antonio; and Oklahoma City, averaging $36,123, $38,413, and $38,481. » Like down payments, offered loan amounts were largest in San Jose, San Francisco, and Los Angeles. Loan amounts in these three metros in 2023 were $785,391, $731,062, and $627,322, respectively. Conversely, at $242,220, $268,484, and $268,900, average loan amounts offered in Buffalo, New York; Cleveland; and Louisville, Kentucky, were the smallest among the nation's 50 largest metros. So why are millennials depressed but taking half of all mortgages? It mainly has to do with the fact that they are now in their prime homebuying years; this means they have a greater financial ability to become homeowners and are incentivized by reasons like needing to provide for their loved ones in a way they may not have been when more of them were in their 20s. Of course, this doesn't mean mem- bers of older generations aren't buying. They are. This is especially true in today's high-rate, low-demand lending environ- ment where a relatively large share of buyers pay for their homes entirely in cash. Despite this, millennials remain an active force in the housing market and their influence will likely continue to grow as rates fall and all-cash purchases become less common. Simply, though millennials are certainly not as wealthy as older gener- ations, they're at a place where buying often makes the most sense. As millenni- als age, younger generations will almost certainly supplant them as the largest share of homebuyers on the market— even if those younger generations might also have to deal with increased financial hardships related to buying. CONSUMER OPTIMISM GROWS AROUND HOME-SELLING CONDITIONS F annie Mae's latest Home Purchase Sentiment Index (HPSI) increased 2.1 points in February to 72.8, inching higher for the third consecutive month, due primarily to increased opti- mism around home-selling conditions. In February, Fannie Mae reported that 65% of consumers said it's a "Good Time to Sell a Home," up just 5% from 60% last month. The share of those who believe it's a "Good Time to Buy a Home" ticked up slightly this month but remains at just 19%. Additionally, some consumers believe mortgage rates will drop over the next year, although on the net, that component fell slightly this month. Overall, the full index is up 14.8 points year over year. Q1 Closing With a Dip in Rates According to Freddie Mac, the 30- year fixed-rate mortgage (FRM) has risen to hover near the 7% mark, averaging 6.88% as of March 7, 2024, down from the previous week when it averaged 6.94%. This marked the first drop in rates after four consecutive weeks of rates on the rise. At this time a year ago, the 30-year FRM averaged 6.73%. "The HPSI increased for the third straight month, continuing its slow but steady rise from the low-level plateau observed through much of 2023, and consumer sentiment toward housing now rests firmly above where it was this time last year," said Douglas G. Duncan, Fannie Mae SVP and Chief Economist. "Consumer attitudes toward home-selling conditions increased markedly in February, with current homeowners, in particular, expressing greater optimism that it's a 'Good Time to Sell,' a development that may foreshadow an upcoming increase in existing home listings. Additionally, despite the recent uptick in rates, consumers remain relatively optimistic that mortgage