In an address on Tuesday at the National Association of Realtors (NAR) Regulatory Issues Forum, HUD Secretary Julián Castro said he believed that millennials are “just as committed” to homeownership as previous generations—contrary to the widespread believe that the members of the younger generation are not interested in owning a home.
Castro cited a recent survey from TD Bank which found that 40 percent of millennials plan to buy their first home sometime during the next year.
“The American Dream of homeownership is as strong today as ever,” Castro said. “And perhaps the best news of all is that millennials are showing that their generation is just as committed to homeownership as their parents and grandparents.”
Student loan debt has been the main obstacle to millennials buying a home, Castro said. About 40 million Americans have some amount of student loan debt, and about 70 percent of students graduate with student loan debt. He said the amount of average student loan debt at graduation spiking by 56 percent from 2004 to 2014. The increase has been so great that it has actually caused a role reversal in some families—Castro said many of the parents and grandparents of millennials are shouldering that student loan debt, and now 20 percent of millennials provide some type of financial assistance to their parents and/or grandparents.
Things are getting better, however, according to Castro. The number of delinquencies on student loans is declining, and economic improvements have resulted in the creation of 14.5 million jobs over the past 74 months. The average hourly wage is up, having risen by 14 cents over March and April, and the current unemployment rate of 5 percent is the lowest it has been post-recession.
Castro added that the housing market is a part of the nation’s overall economic strength.
“Real residential investment has grown by more than 8 percent for six straight quarters, highlighting the housing sector’s solid, steady recovery,” Castro said. “In fact, growth in residential investment has substantially outpaced growth in overall GDP.”
Castro noted that 1.3 million families have taken advantage of the FHA’s lower mortgage insurance premiums since the FHA cut the premium by 50 basis points in January 2015, a controversial move at the time. The immediate result of the cutting of the mortgage insurance premium was a 27 percent rise in the number of home loans endorsed by the FHA from 2014 to 2015 (up to 753,000). Castro said that more than a majority of those loans are being secured by first-time homebuyers.