Niles Garden Examines 2023 Trends Helping Younger Buyers to Afford Homes

Saddled with student debt, struggles with wages, problems with inflation, and rising costs of homes, many younger buyers – and even older millennials haven’t yet found a first-time home to purchase. This represents a large potential market but one caught between forces that have made action very difficult in recent years. Niles Garden thinks several important trends are starting to change that:

Significant Decreases in Mortgage Rates

While rates aren’t quite as high as they were in 2022, they’re still high enough (around 6% to 7%) to deter many new homebuyers from considering or qualifying for a mortgage. However, falling rates are increasingly likely as the Federal Reserve eases off from rate hikes and the market corrects with lower prices that make mortgages easier to consider. While fears of a recession linger, it has not yet emerged and is more likely to be mild if it does appear, so mortgage rates are likely to keep falling.

The Youth-Friendly Investment Market

Gen Z is only starting to enter the housing market, but so far, Niles Garden sees signs pointing towards them being highly pragmatic investors who would rather put their money in real estate than other sources. Equipped with the latest technology for research and mobility that allows them to move to low-cost locations, Gen Z could see a new wave of housing investment with an adaptable strategy different than in previous years.

Niles Garden on How Saving Up Is Starting to Pay Off

Millennials have been working on strategies to save money for years, from extending their time living with parents to splitting apartment rent with friends and delaying marriage or children. These saving strategies are starting to give millennials enough cash reserves to consider a home purchase more readily than before, especially in more affordable developments.

Another trend that’s helped these savings-minded millennials spring into action is more lenders willing to reinvent the down payment or stay flexible when considering down payment options. It’s not just FHA loans that now have low down payments, but a variety of plans are starting to embrace the concept.

Potential Student Loan Forgiveness

While Niles Garden warns it’s far from a certain thing, the current administration has put a certain amount of focus on lowering student debt and enabling student loan forgiveness. These attempts have faced roadblocks and lawsuits in Congress and are likely to be a key issue in 2024 elections. But with enough support, this could be a game changer for millennials and older Gen Zers trying to buy homes. Student loans are one of the primary causes why they can’t amass cash or make mortgage payments, and relief could mean widespread activity for the housing marketing.

Long-Term Housing Inventory Improvements

Niles Garden also predicts that 2023 will see the first signs of housing inventory opening up, a trend that will quickly continue in coming years despite its slow start. While inventory is still lower than is comfortable for first-time homebuyers, it’s starting to improve, and housing starts are in an incredibly good spot. 2023 will be the year to finish development plans and start opening up homes for purchase, even pre-construction, giving young buyers many more affordable options.