Young homebuyers tolerate high mortgage rates better than their older counterparts.
Gen Z and Millennial respondents to a new survey say they will accept rates as high as 6.3% and 6.2%, respectively, in order to buy a home in 2024. Gen X and Baby Boomers, in comparison, won’t accept any rate above 6%.
The survey, ServiceLink’s State of Homebuying Report, focused on Americans who bought or tried to buy a home in the last four years.
Younger buyers also expressed more determination to buy this year, with 63% of Gen Z respondents and 59% of Millennials saying they plan to, compared to 45% of Gen X and 21% of Baby Boomers.
Taken together, 47% of all respondents plan to purchase a house in 2024.
“This is an interesting and pivotal moment in the housing and mortgage industries as the younger generations are not only determined to buy but are seemingly undeterred by the higher price tags and interest rates,” said Dave Steinmetz, president of origination services, ServiceLink.
“Our study suggests that Gen Z and millennials are poised to impact the market in several ways including purchase, refi, and home equity, which is an opportunity for lenders to educate and usher these younger buyers through the process.”
Younger buyers also expressed more optimism about the market and considered buying conditions fairly favorable.
But these generations face bigger challenges than their parents. For one thing, younger buyers make less money than older buyers, with 33% of Gen Z respondents reporting they earn less than $50,000 a year. Only 22% said they earn more than $100,000.
Affordable inventory is slowly coming back as many homeowners find they can’t hang on to historically low interest rates forever. Life circumstances like expanding families, divorce, and changing employment are finally pushing reluctant sellers into the market.
The number of listings priced between $200,000 to $350,000 increased by 20.6% YOY last month, a huge change.
Still, competition for these homes remains elevated, and young buyers without access to sky-high home equity may struggle to land one.
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