The housing market is still on the road to recovery, but it cannot reach it’s destination until the younger generations have accumulated enough money to buy property for themselves. Considering the first part of 2014, the performance of the market has been below what was expected, and now the effects are being translated onto the economy of the country.
In the first quarter, mortgage rates fell, which increased refinancing. As for the buyers, the market still has not seen them in enough numbers because home prices are rising, and those on the lower edge are moving away from the market.
A chief financial analyst of a reputable firm told the press that a lot of factors, belonging to the housing market, had affected the economy of the country. He added that he hoped to see improvements, but their pace will be considerably slower than the one observed in the past years.
In the past few months, houses have become out of budget for many Americans. This is particularly true for the younger buyers. Prices have increased by as much as 13% and since there are not enough homes around, sellers are demanding even more. As far as the buyers are considered, the market does not hold any attractiveness or incentive for them. There is nothing that will compel them to buy and so they have no issues with staying on the sidelines.
Why has affordability become such an issue? There are a lot of reasons for this. The younger buyers are already facing high debts because of their student loans. If they want to add a mortgage to it, they will require higher income levels. In the month of April, these have grown by 0.5%, but this slight increase is not enough to warrant stepping into the housing market.
A finance professional said that household income is the prime reason that is preventing people from buying a home.
A chief economist also said that money is an issue for young adults. Their savings are not huge, which has made it difficult for them to have enough money for a down payment. Most of them prefer renting since homeownership is out of the question right now. A lot of these young adults are still living with their parents out of financial necessity.
Until the younger population can afford to purchase homes for themselves, the market will not fully recover completely.
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