DS News

38 AFFORDABILITY AN ISSUE FOR MILLENNIAL HOMEBUYERS A majority of millennials who plan to buy their first home in the next 36 months say they can't afford the type of home they would like to live in, according to data provided to DS News by ValueInsured. e company surveyed 1,019 adults who were planning to buy their first home in the next 36 months, but did not currently own a home. e report said that 76 percent of the respondents lived in a home where they paid rent and 24 percent lived in a home where they did not pay rent. Of the millennials surveyed, 54 percent plan to buy a "forever home" or a home where they can live for a while and 40 percent would like to buy a starter home that they can upgrade from. Some 74 percent said they plan to cap their next home purchase budget at $250,000. While 38 percent said they would like to live in their new home with their spouse or partner with children, 16 percent planned to share their home purchase with friends, roommates or rental tenants. However, only 36 percent were confident they could afford the down payment now to buy the kind of home they would like to live in. e report indicated that a majority of millennials cannot afford to buy a home, and even among those who could afford to buy immediately, only 46 percent thought that now was a good time to buy a home. Around 55 percent of respondents said they were concerned with timing the market and wanted to make sure they were not buying at overvalued rates. Moving jobs or losing a job was a major concern for these first-time buyers, with 48 percent indicating concern about a job move or a job loss after they committed to buying a home. e survey also highlighted the top three criteria these homebuyers look for: Finding a home that requires liitle in the way of updgrades or renovation, butying a bigger home with more room or space, and moving to a neighborhood with access to better schools. GETTING A MORTGAGE GOT EASIER IN Q3 2017 Mortgage credit availability rose slightly from 5.1 percent to 5.6 percent in the third quarter of 2017, according to the Urban Institute's Housing Finance Policy Center's latest credit availability index (HCAI). is increase, which pushedthe index to its highest level since 2013, was driven mainly by credit expansions within both the government sponsored enterprises (GSEs) and government channels due to higher interest rates and lower refinance volumes. e HCAI measures the percentage of home loans that are likely to go unpaid for more than 90 days past their due date. A higher HCAI indicates that lenders are willing to tolerate defaults and are taking more risks, making it easier for borrowers to get a loan. e report indicated that mortgage credit availability at both Fannie Mae and Freddie Mac was at the highest level since 2011, and its credit box for borrowers had expanded more effectively than the government channels. From Q2 2011 to Q 3 2017, the total risk taken by GSEs increased 86 percent from 1.4 percent to 2.5 percent. e government channel reached its highest level since 2012 after increasing for three consecutive quarters in 2017, the report said. In the first three quarters of 2017, the risk in government channel rose from 9.8 percent to 11.1 percent. e government channel includes the Federal Housing Administration, e U.S. Department of Veteran Affairs and the U.S. Department of Agriculture Rural Development programs. Portfolio and private label securities channel continued to stay close to or at the record low for the amount of default risk taken. e channel took only 0.2 percent product risk in Q 3 2017 even as the total default risk taken by this market remained at a low of 2.2 percent in the third quarter. Even if the current default risk was doubled across all channels, it would still be within the precise standard of 12.5 percent from the 2001 to 2003 levels, the report said.

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