Two new data reports are offering a potentially problematic view of today’s housing market: more people are interested in pursuing homeownership, but fewer properties are available.
An increasing number of renters are looking to step up to homeownership, according to new data released by TransUnion
. During the first quarter, TransUnion determined that 55 percent of prospective buyers shopping for a mortgage were non-homeowners—up from the first quarter 2016 level of 50 percent and the first quarter 2015 level of 45 percent. During the first quarter, 29 percent of mortgage shoppers were Millennials, up slightly from 28 percent in 2016 and 27 percent in 2015.
As for qualifications, TransUnion found 34 percent of renters under the age of 44 had a VantageScore 3.0 credit score below 580, which the company said was the “common benchmark used by some institutions to determine whether a borrower qualifies for a low down payment loan.”
“The rental market has seen sustained growth for the last several years, but occupancy rates have flattened from their peak in the second quarter of 2016,” said Mike Doherty, Senior Vice President of TransUnion’s rental screening solutions group. “This new uptick in mortgage shopping could be a precursor to further declines in occupancy, which would impact rent growth—and ultimately, revenue—for multifamily property owners. In anticipation of this potential shift, owners and property managers should be offering the right amenities and programs designed to attract renters.”
But where are these prospective buyers going to find a property for purchasing? According to a new data analysis by Zillow
, the number of for-sale homes becoming available is falling at its fastest pace in almost four years. The typical home stayed on the market for just 77 days, the least amount of time ever recorded by Zillow, while would-be homebuyers have nine percent fewer homes to choose from than a year ago—the greatest drop in inventory since August 2013, when inventory was down more than 10 percent. Complicating matters are home prices. Zillow reported that the median home value across the country is $199,200, up 7.4 percent since this time last year. In comparison, median rent across the nation rose 0.7 percent year-over-year to a median payment of $1,416 per month.
"Inventory has been falling for years with supply no longer meeting demand, and there are multiple reasons for the worsening situation," said Zillow Chief Economist Svenja Gudell. "On the demand side, simple demographic change is contributing to incredibly high demand as millennials reach their prime home-buying years and begin to enter the market in droves. This is coupled with relatively low levels of new home construction on the supply side insufficient to keep pace with demand, and what is built is largely priced beyond the reach of many of the first-time and entry-level home buyers in the market."