supply. The exceptionally favorable age demographic trends are also the driving force behind the current housing market. According to Freddie Mac, there are currently 18 percent more persons aged 25 to 34 than there were in 2006. This represents an increase of 6.6 million prospective first-time homeowners, from 39.5 million in 2006 to 46.1 million today. In addition to the increase in first-time homebuyers, the number of high- income renters who can afford to buy and are of prime first- time homebuyer age has also been growing. In 2006, lending criteria were significantly loosened, and little examination was done to determine whether or not a borrower had the ability to repay their loan. These days, the requirements are more stringent, which lowers the risk for both the lenders and the borrowers. Consistent with a more challenging housing market for buyers, the share of buyers that faced at least one mortgage denial before getting approved grew from 22% in 2020 to 34% in 2021. Communities all around the country are struggling because of low inventories. Over the past decade, chronic underbuilding, and the influx of millions of millennials into the homebuying market have resulted in a major mismatch in housing supply and demand. Despite the fact that mortgage rates are skyrocketing, the housing market is not going to crash any time soon.
References:
Cabello, M. (2022, August 10). Will fed continue to push interest rates up? Here’s what the latest inflation stats tell us. Retrieved from https://www.cnet.com/personal-finance/banking/will-fed- continue-to-push-interest-rates-up-heres-what-the-latest- inflation-stats-tell-us/ Freddie Mac. (2022, July 20). Quarterly forecast: market slowdown will continue as high rates and prices exacerbate affordability challenges. Retrieved from https://www.freddiemac.com/research/forecast/ 20220720-quarterly-forecast-market-slowdown-will-continue-
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