Although US Federal Reserve Chairman, Jay Powell, may feel the US housing market is in good shape, it seems as though the market may be slowing more than is ideal. On the other hand, the economy in America is doing well, with one of the lowest unemployment rates in the country since 1969.

So why are some experts so concerned about the state of the US housing market? Well, unlike the generations before them, the enormous group of millennials is lagging when it comes to purchasing their first homes. In fact, young adults today are buying homes at lower rates than in 1988.

How can you ensure that you meet their needs, then? Next year, when lenders analyze 2018 HMDA data in LendingPatterns™, they will be able to identify millennial markets, average size of home purchases, and preferred mortgage products. In the meantime, it’s important to understand a few US housing market trends:

Housing Price Growth

It’s no surprise that home prices continue to grow with time; however, the challenge in 2018 is that average inflation is not rising at a similar speed. Between 1990 and 2016, both rent costs and housing prices rose 20% and 41% respectively faster than the average inflation rate. This means that the affordability of homes is becoming increasingly scarce because more people are competing for a limited number of reasonably priced homes. To make matters worse, home prices are growing about 50% faster than incomes. Although individuals are pursuing jobs and opportunities across the country, the wages for those jobs is not growing proportionately with the rising costs of homes.

Larger Amounts of Debt

According to MarketWatch, the level of student debt has accumulated to $1.4 trillion in the US. This means that most university graduates are joining the weak employment market with approximately $30,000 worth of debt. The average existing home was priced at a record high in June at $276,000, which is often well-outside the affordable range for most first-time or young homebuyers. Is it any surprise, then, that most of these individuals are hesitant to add to their debts by purchasing a home? LendingPatterns™ can help you understand these millennials’ needs and offer the right mortgage products for them.

Less Job Security

While the US economy remains strong and shows a positive outlook for the near future, millennials are not counting on job security to help them become homeowners. This generation has gathered a well-deserved reputation for job hopping. If you’re a millennial and uncertain of your future income, you’re less likely to make a big investment.

At ComplianceTech, we know that not lenders are alike. We have decades of experience in the finance industry, and a focus on fair lending risk management. If you’re interested in identifying HMDA, fair lending, and CRA compliance risk, contact us through our website or by calling (202) 842-3800.