6 Reasons Millennial House Buyers Secretly Love Trump
by James Swift
The housing market has changed a lot in the last few years. In 2018, the housing market is forecasted to continue rising. Some experts think that it could be due to the policies and general economic direction of President Donald Trump.
While some millennials may say that they don't like Trump, we suspect that some home buyers in that generation may actually love him. Here is why we think so.
#1 Rates Are Staying Steady and May Even Drop
It is true that rates were rising at the end of 2017 with some rates for 30-year fixed mortgage rising into the low 4's. As of December 2017, however, rates have been holding steady and even have declined a bit. And this is despite the Fed raising its key interest rates three times in the last year.
Even though the housing market is fairly hot in many parts of the US, there still is plenty of opportunity for the millennial buyer to get a very affordable home loan. These buyers are likely never going to see rates as low as they will be in 2018. Who would have thought that interest rates would still be at 4% or lower for a 30-year fixed loan?
Even if the rates were to rise in the next few months, this would not be a deal breaker for many millennial home buyers. Why? Because even if the rates were to rise from 4% to 4.8%, this would only increase the monthly payment by less than $100. With wages rising and unemployment dropping, many buyers can absorb the small increase in monthly payment that accompanies higher rates.
If you are still worried about rates going up, remember that your grandparents were probably paying rates far above 10% in the 1970s and early 1980s. Things are much better today than years ago. 2017 is a very good time to enjoy very low interest rates in most home mortgages, even for people with bad credit.
#2 The Cost of Buying Is Lower Than Renting in 2018
According to a housing study by the website Trulia in 2017, the cost of renting this year is 37% higher than buying, on average. This gap has risen .5% from the year before.
While it is a downer that the cost of renting is going up for renters, it is a better deal than ever in the Trump era to buy a home. Many parts of the country with lower home prices will be an even better buy for young first-time home buyers.
On top of that many finance companies are advertising zero down home loans with easy credit requirements. If that's not enough, there are competitively priced lender paid PMI programs that eliminate the requirement of paying mortgage insurance.
#3 Home Values Are Rising
Again, this can be a downer for some home buyers who want to buy more home for their money. But millennials who have pulled the trigger and bought in 2017 likely are seeing their homes appreciate. Appraised values on homes in the Trump era are on the rise. The more equity that people have in their homes, the better off they are financially.
Home buyers with equity may decide to sell their home and take the cash to buy a bigger home, or invest that money into various investments. Or, they may do a cash out refinance and renovate the home. This can lead to an even higher property value.
#4 Economy Is Looking Stronger
The unemployment rate in the US is near 4%. Even though there is room for improvement, that still is a low number. Many millennial buyers are finding in the Trump presidency that there are more good-paying jobs available that allows them to buy a larger home.
#5 Low Down Payments Are Here
There will be more low-down payment loans available in 2018. Many people with 580 credit scores can buy a home with an FHA loan and a down payment of 3.5%. There are a few loans available as well with a down payment of 3% or 5% from Fannie Mae and Freddie Mac-backed lenders.
#6 Easy Qualifying Is Here
The housing recovery is almost complete, and while the days of 100% financing loans are just about gone (other than VA loans), it is quite easy for most Americans to qualify for a home loan today. The main factor for many loan programs today is that you can show that you have the income on paper to afford the loan without defaulting.
Credit worthiness is not as important as a few years ago; as noted above, you can get an FHA loan with 3.5% down with a 580-credit score. It is easier to get approved with a 620+ credit score, but low credit borrowers are not shut out of buying a home.
Loans that are guaranteed by Fannie and Freddie also can be obtained if you have a credit score of 620 to 640. So even if you have so-so credit coming out of college or your first few years in the work force, you have plenty of mortgage options in the Trump era.
The Bottom Line on House Buying in 2018 Under Trump
Millennials have quite a few home buying options in the Trump era, and the economic conditions for doing so are more favorable than in years. If you have the income to buy a home, there is little reason why you should not pull the trigger while DJT is in office!
References: Gordon, L. 3 Reasons You Should Buy a Home Before 2017 Ends. (2017, Jan. 23).