Millennial Myth Busting – as an older Millennial I tire of click-baity articles that claim Millennials killed ‘x’ industry/company and can’t afford a home because they spend too much on avocado toast. Gray Kimbrough has written a few interesting economic papers that dispel many of these myths pointing toward contributing factors such as the recent recession and a higher number of graduate degrees (an correlated student debt) instead of ‘laziness & apathy’. Apparently young adults switch jobs at a much lower rate than Gen Xers and Baby Boomers did when they were younger. Rates have been increasing since the recession but they are not at pre-2000 levels. The trend of young adults living with parents has been growing steadily since the 1960s and has not recently accelerated.
Rates – fluctuated a bit this week and ended the week near where they started. A “pennant” pattern is developing (looks like a flag) which can sometimes signals a breakout, and usually this breakout is in the direction of the most recent trend. If this plays out that would be good for mortgage rates!
Appreciation – The Case Shiller & FHFA House Price Indices came out this week and they both showed 0.4% gain in July over June’s numbers. Annually their figures differ by 1.8%. This is because Case Shiller tracks values on the same individual homes over time whereas FHFA exclusively tracks values on homes with conforming loans (meaning lower value). The bottom line is that the lower-priced or entry level homes are increasing in value more rapidly as there is higher demand. Whether you are looking a 3.2% annual gain or a 5% annual gain it is a meaningful number when multiplied by hundreds of thousands.
New Construction – this market makes up 10% of the total housing market and this report is the second highest report in the past 12 years.