Studies have shown that an increasing number of millennials are leaving their parents' homes and moving out to the suburbs. People between the ages of 18 and 34 are among the highest group of people who are currently buying homes, furniture, and utility vehicles.
In 2012, nearly 36% of the people between the ages of 18 and 34 were occupying the basement of their parents' homes. As of now, all that's about to change; young adults are forming their own households and ownership rates are increasing.
This particular phenomenon is extremely beneficial for the economy as it helps to pick up the pace of the growth of the economy that had earlier slowed down due to the credit crisis. Further, as more and more millennials start investing in real estate, it results in a rise in equities.
One of the reasons for the current increase in homeownership rates is the change in the requirements to apply for a loan. Until 2002, loans were granted only after a person's credit score, income, collateral, and a number of other factors were analyzed. Between 2002 and 2007, loans began to be granted to third parties who took up the responsibility of standing as a trusted securitizer on behalf of someone who was not eligible to apply for a loan.
During this period, a number of lending agencies started offering 'liar loans'. These loans were granted without any requirement for the standard documentation. A number of people started applying for such loans and ended up in debt being unable to pay off the loan amount.
During this period, when one could easily apply for loans, a number of people began to buy homes and the prices started peaking. A series of events led to a financial crisis and of course, people who could not repay their loans had to face foreclosures. In addition, prices started falling and both lending agencies and banks tightened the rules for applying for a loan. The rates of homeownership declined as well.
Since 2016, homeownership rates are once again seeing a rise due to a number of factors. These include rising rents and an increase in jobs in the economy. Also, a large number of millennials are now starting their own families and involved in buying homes and other assets for their families.
As home sales are rising, people remain hopeful that there will be significant considerations when it comes to mortgage rates.