17 million first-time homebuyers are entering the housing market in the next five years, and most of them will be Millennials. Are you ready?Source: thefinancialbrand.com
In the next five years, TransUnion estimates there could be anywhere from 13.8 to 17.1 million first-time homebuyers entering the housing market.
For its analysis, TransUnion developed a model that examined thousands of credit scores and attributes determining credit worthiness and propensity to purchase a home. The resulting “First-Time Homebuyer Propensity Model” identified specific consumers likely to become first-time homebuyers. Using this model, TransUnion determined that there could be as many as three million first-time homebuyers over the next year.
This would add a significant number of consumers to the mortgage pool. For comparison, 6.2 million consumers opened a new mortgage in 2015, approximately three million of which were first-time homebuyers.
TransUnion’s projections are based on U.S. consumers who do not currently have a mortgage, coupled with long-term estimates for growth in the mortgage purchase market and the percentage of first-time homebuyers in the traditional mortgage market.
The study shows that Millennial consumers aged 20-39 will likely represent the majority of first-time homebuyers. In 2015, consumers in this age group represented 60% of first-time homebuyers, up from 44% in 2000. The youngest consumer subset studied, those ages 20-29, also have experienced major growth among first-time homebuyers, as their share has risen from 17% in 2000 to 28% in 2015.
In another study fielded by TransUnion, nearly a third of Millennials (consumers ages 18 to 34) said they hope to purchase a home within the next year, but more than 40% are worried they may not have the credit to do so.
When asked their primary concerns about the home-buying process, Millennials said they are worried about having a low credit score (47%), not being able to fund a down payment (59%) and/or not qualifying for a low interest rate on a mortgage (56%), above all other concerns.
Credit scores are lowest among young adults ages 18-29 year olds, which have FICO scores below 699, than any other age groups, according to data collected by credit scoring system FICO. Approximately 32% of FICO consumers ages 18-34 have a score below…[read the full article at thefinancialbrand.com]