DSNews delivers stories, ideas, links, companies, people, events, and videos impacting the mortgage default servicing industry.
Issue link: http://digital.dsnews.com/i/1532176
79 February 2025 J O U R N A L February 2025 » Confidence in Attaining the Dream As sentiments towards homeowner- ship remain positive, according to the Re- altor.com survey, more than half of those surveyed (59%) believe that homeowner- ship is achievable for them. Baby boom- ers are the most confident when it comes to their ability to buy a home, as 63% felt homeownership is achievable, and, perhaps surprisingly, millennials are the next most likely to consider homeowner- ship achievable (57%), followed by Gen X (55%) and Gen Z (54%). Interestingly, the age of homebuyers reached an all-time high in 2024. According to the National Association of Realtors (NAR) 2024 Profile of Buyers and Sellers, the median age of buyers peaked at 56 years old, and the typical repeat buyer age is 61 years old, contributing to the bump in confidence for the eldest generation. Homeownership as a Contributor to Long-Term Wealth When it comes to building wealth, millennials (53%) and Gen Z (52%) are more likely than their elders to believe that owning a home is necessary to build long-term wealth. Less than half of Gen X (48%) and baby boomers (45%) see homeownership as necessary for building long-term wealth, even though they are more likely to own their cur- rent residence. According to the survey, 66% of baby boomers, 54% of Gen X, 43% of millennials, and 33% of Gen Z currently own their primary residence. HOME INVESTORS PULL BACK AS RATES AND PRICES REMAIN HIGH S tubbornly elevated mortgage rates and home prices are discouraging investor activity in the U.S. housing market. According to a new report from CoreLogic, while in- vestor activity rose slightly between the second and third quarters of 2024, their market share remains below last year's level—some 25% compared to 28% in 2023. CoreLogic predicts that investor market share will likely remain steady unless mortgage rates drop. Shifting Investor Trends "As the total number of purchases continues to slide, interest rates remain elevated, housing prices are high, and economic conditions are in f lux," said Thomas Malone, Professional, Econo- mist in the Office of the Chief Econo- mist at CoreLogic. "Faced with these headwinds, it is not clear what may draw investors back into the market at previous levels." Investor activity surged in recent years when mortgage rates hit historic lows. Before the pandemic, investors accounted for less than 20% of the market, but this figure peaked at nearly 30% in January 2024. Despite the slowdown, lower-priced homes remain a battleground for competition between first-time buyers and investors. Impact of 'Mom-and-Pop' Investors The report highlights the signifi- cant role of small-scale investors, often referred to as "mom-and-pop" land- lords. These individuals owning three to 10 properties represent 60% of all investor purchases. "Smaller-scale in- vestors play a powerful but understated role in the market, buying home prices even as overall demand has softened," Malone noted. In contrast, large investors (owning 100 to 1,000 properties) and mega inves- tors (owning more than 1,000 proper- ties) make up a very small portion of the market. In Los Angeles—the U.S. city with the highest investor share—42% of 2024 home purchases were by investors, yet only 2% were from mega investors. Regional Variations Investor activity varies widely across the country. Atlanta recorded the second-highest share of investor transactions in 2024 at around 35%, followed by Riverside, California, and Las Vegas. Minneapolis had the lowest investor market share among the top 20 metros at just over 20%. The Bottom Line Although a pullback in investor purchases may alleviate some pressure on prospective homeowners, compe- tition remains steep, particularly in the lower-priced tiers. These trends underscore the critical yet understated role of small-scale investors in shaping the U.S. housing market.