DS News - HSBC

DS News September 2018

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» VISIT US ONLINE @ DSNEWS.COM 31 What are the drivers to get more millennials into the housing market? e first driver is educating millennials on their borrowing options. One myth that we continue to see in the market is that you need a large amount of down payment to become a homeowner. For example, many first-time homebuyers are unaware that with a conventional mortgage, you can go down to as little as 3 percent down payment. Today, FHA loans are the most popular option for first-time homebuyers and are in fact the largest product for this segment, followed by conventional loans with mortgage insurance. e latter is the fastest-growing market segment in the mortgage industry. at's a very important driver because we have seen that down payment and getting a mortgage loan are some of the biggest hurdles faced by first-time homebuyers. Secondly, it is important to educate mil- lennials about the housing options available for them and what will suit them in the long- and short-term. For example, If they're planning to stay at a location for a short period then it is better to rent. However, if a buyer is thinking of starting a family and settling down then homeownership looks a lot more attractive, just because they have the appreciation in home prices working for them over a longer period. Prices are the third driver. Millennials are part of a large generation, and whenever you have a large generational cohort like this one coming into the market, they tend to compete against themselves and create a demand pres- sure that tends to drive up home prices. In that sense, it is better to buy early than later. How have homeownership trends changed regarding diversity over the past decade? ere's been an increased focus on thinking about how we can responsibly expand the credit box and make affordable products available to all current and prospective homeowners. We view this as a necessary step towards continuing to drive America's housing market, which is central to our country's economy. What can we expect from the market moving to the last quarter of 2018? Inventory will remain a challenge for the rest of the year and will likely be flat by the end of 2018. An important exception will be the strong sales of new homes, which will continue to increase between 10 percent and 15 percent as homebuilders increase their production. Regarding home prices we will continue to see a 6 percent to 7 percent home price appreciation, partly because of strong demand and also because we still don't have as much new construction as we should. e increasing costs for home builders from the tariffs that have been imposed have become more and more relevant to the overall housing market in the last few months and are contrary to what we want to see from policymakers, which is making housing more affordable. Regarding homeownership, we expect 1 percent increase year-over-year for the rest of 2018, with the recovery being the strongest among young households that ties into millen- nials coming into the housing market. "Whenever you have a large generational cohort like Millennials coming into the market, they tend to compete against themselves and create a demand pressure that tends to drive up home prices." » VISIT US ONLINE @ DSNEWS.COM 31 What are the drivers to get more millennials into the housing market? e first driver is educating millennials on their borrowing options. One myth that we continue to see in the market is that you need a large amount of down payment to become a homeowner. For example, many first-time homebuyers are unaware that with a conventional mortgage, you can go down to as little as 3 percent down payment. Today, FHA loans are the most popular option for first-time homebuyers and are in fact the largest product for this segment, followed by conventional loans with mortgage insurance. e latter is the fastest-growing market segment in the mortgage industry. at's a very important driver because we have seen that down payment and getting a mortgage loan are some of the biggest hurdles faced by first-time homebuyers. Secondly, it is important to educate mil- lennials about the housing options available for them and what will suit them in the long- and short-term. For example, If they're planning to stay at a location for a short period then it is better to rent. However, if a buyer is thinking of starting a family and settling down then homeownership looks a lot more attractive, just because they have the appreciation in home prices working for them over a longer period. Prices are the third driver. Millennials are part of a large generation, and whenever you have a large generational cohort like this one coming into the market, they tend to compete against themselves and create a demand pres- sure that tends to drive up home prices. In that sense, it is better to buy early than later. How have homeownership trends changed regarding diversity over the past decade? ere's been an increased focus on thinking about how we can responsibly expand the credit box and make affordable products available to all current and prospective homeowners. We view this as a necessary step towards continuing to drive America's housing market, which is central to our country's economy. What can we expect from the market moving to the last quarter of 2018? Inventory will remain a challenge for the rest of the year and will likely be flat by the end of 2018. An important exception will be the strong sales of new homes, which will continue to increase between 10 percent and 15 percent as homebuilders increase their production. Regarding home prices we will continue to see a 6 percent to 7 percent home price appreciation, partly because of strong demand and also because we still don't have as much new construction as we should. e increasing costs for home builders from the tariffs that have been imposed have become more and more relevant to the overall housing market in the last few months and are contrary to what we want to see from policymakers, which is making housing more affordable. Regarding homeownership, we expect 1 percent increase year-over-year for the rest of 2018, with the recovery being the strongest among young households that ties into millen- nials coming into the housing market. The best defense for a better neighborhood Real People, Real Results www.assero24.com/defense "Whenever you have a large generational cohort like Millennials coming into the market, they tend to compete against themselves and create a demand pressure that tends to drive up home prices." 2018 SEPTEMBER 16-18 2018 P R O U D S U P P O R T E R S E P T E M B E R 1 7 , 2 0 1 8 P R O U D S U P P O R T E R S E P T E M B E R 1 8 , 2 0 1 8

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