May 26, 2015

First-time Homebuyer Update: Why Aren't More Millennials Buying?

Today’s post originally appeared in VHDA’s Spring 2015 eNews. Sign up for VHDA eNews.

With mortgage rates at historic lows, and home prices still below pre-recession highs, monthly mortgage payments are now affordable and, in many cases, less than the cost of renting. So, why is it that millennials -- the largest group of potential first-time homebuyers -- are struggling to establish independent households?

For starters, wages for young households remain low, which limits the amount of mortgage liability they can assume. Also, buying a home requires significant upfront savings for a down payment and closing costs. Low wages, high rents and heavy student debt prevent many millennials from accumulating these funds. Also, a substantial number of young minority households are first-generation homebuyers, and their families may lack the home equity or other financial resources to help with upfront expenses.

For millennials hoping to buy their first home, VHDA's new first-time homebuyer programs are launching at a good time. Our Mortgage Credit Certificate and 3% Down Payment Assistance Grant programs could help make the cost of homeownership a little more affordable for these younger homebuyers.
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