influx of new buyers, FreddieMac estimates the housing shortage has increased even more. As a result, demand continues to rise as these millennials search and com- pete for homes which are in low supply.
THE CURRENT IMBALANCE BETWEEN SUPPLY AND DEMAND Almost 15 million millennials will age into their prime home-buying age of 32 over the next 3 years. With this
LARGESTAGE COHORTTO ENTER THE HOUSINGMARKET 2020
5.00
4.75
MEDIAN AGE OF THE FIRST-TIME HOME BUYER
4.50
4.25
4.00
3.75
3.50
Source: Sundae.com
What’s even worse, the number of new homes con- structed below 1,400 square feet (entry-level homes) col- lapsed after the Great Recessions and hasn’t recovered. Meanwhile, the stimulus put money in people’s savings accounts and COVID-19 forced them to save on going out and vacations in the past year. The personal savings rate skyrocketed, meaning that the percentage of people’s income remaining each month after taxes and spending grew dramatically. According to the U.S. Bureau of Eco - nomic Analysis, it spiked from 12.7% in March to a record 32.3% in April. With forced savings and stimulus help, more renters entered the buyer pool or could save up to buy a house sooner than expected. Before the pandemic, buyers cited down payment as being the most difficult part of the home-buying process. In the post-pandemic world, it might be a combination of down payment and fierce competition.
NUMBER OFNEWHOMES CONSTRUCTED BELOW1,400 SQUARE FEET Entry-level home construction collapsed after the Great Recession and never recovered
200K
150K
100K
50K
0
1999
2002
2005
2008
2011
2014
2017
2020
Source: U.S. Census Bureau, Freddie Mac, Sundae
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