The data doesn't lie, Gen Z is crushing the housing market

Your 5 minute weekly real estate update

Kimi Green
April 27, 2023

Recently, many people believed that having a low credit score could result in a better fee discount for buying a home compared to those with a high credit score. However, this is a false claim spread across social media, and we will break it down for you.
Loan-level price adjustments (LLPAs) are fees that may be charged based on factors such as the down payment amount and the percentage of monthly income allocated to payments.
Credit score is another factor that influences LLPAs.
Previously, borrowers with credit scores below 680 paid higher fees, but recent changes also lowered fees for those with high credit scores and down payments of 20% or more. (This part has been drastically overlooked, causing confusion)
As a result of these changes, if you put 25% down with a score >780, you will pay 0% in fees (down from 0.25%) and if you are putting down 20%, you will pay 0.375% (down from 0.5%).
Overall, borrowers with high credit scores and a down payment greater than 20% will benefit from these adjustments, while those with lower credit scores will continue to pay higher fees.

New home sales surged by 9.6% in March, reaching their highest levels since March of 2022.
However, the majority of new homes sold were above the $300,000 threshold, which leaves first-time buyers with pent-up demand on the sidelines.
The market is undersupplied, with listings still half of what they were in 2019, and mortgage credit availability is the tightest it’s been since 2013.

According to a recent report from Redfin, young adults aged 19-25 (Gen Zers) are tracking along with their parents' homeownership rate, despite the common narrative that it's harder for young adults to buy homes than in previous generations.
Many Gen Zers took advantage of historically low mortgage rates to become homeowners in 2020 and 2021. The typical mortgage rate for homebuyers under 25 using a conventional loan was 3.3% in 2020 and 3.1% in 2021.
Younger homebuyers tend to buy cheaper homes with smaller down payments, as they may be more flexible about home size and location than older adults who are more likely to have children and value proximity to certain schools and their workplace.
Millennials, on the other hand, are tracking behind older generations' homeownership rates. Just over two in five (43%) 30-year-olds owned their home in 2022, compared to roughly half of baby boomers (52%) and Gen Xers (49%) when they were 30.

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