People Will Still Be Buying Homes and The Population is Growing…
The future of home lending belongs to the Echo Boomers, or the children of baby boomers, industry executives say. This demographic cohort is roughly 80 million strong and many are staying on the sidelines for now, according to Lisa Zakrajsek, executive vice president of Wells. For the most part, this population is more interested in renting. However, a notable portion will want to buy a home, one day. “We did a deeper study of this demographic,” she said. “This millenial population in the age range of 11 to 31 is an enormous population. There are 6 million more potential first-time homebuyers today than there were in 1977 and this population is still interested in buying property.” Despite the desire to buy a home, Zakrajsek said these people, also known as Millennials, are putting off purchasing as the market continues to drag and the jobs situation remains shaky. But she believes the next generation of homebuyers will dive in head-first when the time is right. Shawn Krause, executive vice president of Quicken Loans said these young buyers are expecting a lending industry that is more in line with their preferences. This means products need to be diverse and evolved, employing traditional methods, as well as online lending services and even social media outreach, according to Krause.
The Mortgage Bankers Association is projecting a 28% jump in purchase money originations in 2011. And even though refi originations are expected to fall off the cliff, the MBA is still looking for a $1 trillion year. Issued at the group’s annual secondary market conference in New York, the latest forecast calls for an increase in purchase money loans from $474 billion last year to $606 billion in 2011. Refi lending, on the other hand, is projected to decline 59%, from $1.33 trillion in 2010 to just $424 billion this year. MBA expects an even more precipitous drop in refi business in 2012, when the volume of new loans taken out to replace existing loans falls to $233 billion. At the same time, though, purchase money lending is expected to increase again in 2012, to $729 billion. Overall, originations will decline from $1.5 trillion in 2010 to $1.03 trillion this year and to $962 billion in 2012.
Sources: Housing Wire and National Mortgage News