The Federal Reserve hiked rates Wednesday for the second time this year, not at all unexpected, and called for faster rate hikes this year. They expect two more rate hikes in 2018 and forecasted three more in 2019. A strong labor market and economy supports this thanks to good job gains and the unemployment rate declining.
Inventory is the top barrier keeping first-time homebuyers from buying, not affordability or the economy. Millennials are keen on buying and persistent to make it happen. A recent survey showed mortgage rates would have to rise a full percent at least for millennials to start thinking about pulling out of the market.
For the first time in a long time, we’re talking more than 50 years here, there are four generations influencing real estate and housing: Millennials, Baby Boomers, Generation X, and Generation Y. We’d even argue to include Generation Z, the population who is wanting to get a quick start in living on their own as soon as they can and are receiving the positive reputation of being more “financially-savvy” to help make it happen. Also, we haven’t even felt the full impact of millennials entering the housing market as many are just starting to do so.
Millennials aren’t afraid to buy a starter home or give up some features to remodel the home themselves, completing more home projects in the last year than any other generation. If a millennial wants to own a home, they’re going to own a home and if they have to pick up a hammer to make it happen, they will. For those who already own a home but want to upgrade, they’re not in a rush to move and face the competition or the rising home prices, they’re also picking up that hammer. The market is still great for cash-out refinances to make home improvements and millennials are taking advantage of the equity in their home.