New jobs numbers released this week by the Department of Labor indicate the U.S. employment situation is stabilizing. After years in which millennials were shut out of the housing market, it appears young people are finding jobs and enjoying the benefits of consistent employment.
For years, it was thought millennials were uninterested in homes, cars and other big-ticket purchases seen as hallmarks of success for older generations. Now that people under the age of 35 are consistently finding work, it’s clear many of these people are interested in homes and that could have a sizable impact on the housing market over the next few years. These young people finally have the opportunity to flex their economic muscles, which will have serious implications for the U.S. economy overall.
Employment’s up and millennials are spending
The most recent jobs information from the DOL revealed a decline in the number of people filing unemployment claims. This brought unemployment claims to their lowest level since April of 2000, and signals continued economic recovery in the U.S.
“Unemployment is down among millennials.”
The unemployment rate for people between the ages of 25 and 34 dropped by 1.2 percent over the past 12 months, according to the Bureau of Labor Statistics. That means a generation famous for being saddled with immense student debt can finally begin paying off loans and purchasing expensive items.
The auto market may provide an example of millennials’ impact on tomorrow’s housing market. For years, conventional wisdom has held that millennials are uninterested in car ownership, and the numbers seemed to support those claims. Bloomberg reported findings from J.D. Power and Associates that show millennials accounted for just 18 percent of new car sales in 2010, but 27 percent of new car sales in 2014. That explosive growth implies that millennials have always been interested in cars, but were unable to purchase vehicles because of other factors. Now that more millennials are employed, some of those roadblocks have fallen away.
The outlook for homes
Despite perceptions that millennials would never develop an interest in homebuying, young people have recently revealed their interest in homeownership. The National Association of Realtors discovered that most of the homes sold last year went to millennials, and millennials share of the home market is likely to increase over the next few years as unemployment drops even further for this generation.
There will still be hurdles for millennials who want to purchase a home. Beth Ann Boyino, U.S. Deputy Chief Economist at Standard & Poor’s Ratings Services, noted that debt continues to be a serious concern for many young people, and the presence of stringent requirements at many traditional lenders impacts millennials’ ability to get financing for home purchases. According to Bovino, individuals with student debt have lower credit scores than comparable individuals without debt. No matter how much these people want to purchase a home, financing may remain elusive.
For buyers who lack strong credit scores, Impac Mortgage Corp. Wholesale provides adjustable rate FHA loans that can make homeownership dreams a reality.
For more information about Impac Mortgage Corp. Wholesale’s loan programs, contact us directly or an Account Executive at 877-310-0970.