Special Feature: Jason Oppenheim, Selling Sunset | Page 101

After two years of high competition and fast­rising prices in residential real estate , the market is at last seeing signs of cooling off . Amid higher prices and recent interest rate hikes , demand is leveling out . Pending home sales have begun to decline . Online searches , showings , and mortgage applications are down , and many experts anticipate a rebalancing in the market over the next year .

While many buyers may be starting to feel relief , younger buyers have had an especially difficult time in this market and may continue to struggle . The Millennial generation — Americans aged 26 to 41 — are currently in their peak homebuying years , representing 43 % of buyers according to recent data from the National Association of Realtors . Because they are earlier in their working lives , young shoppers may have less saved up to put toward a home , and they also tend to be firsttime buyers , which means they do not have existing home equity available to help finance a purchase . While the market was at peak competitiveness , this made it harder to outbid buyers who had more resources at their disposal . Now , with home prices at historic highs and interest rates increasing , many young buyers are being priced out of the market altogether .
To overcome these challenges , some young buyers have relied on older friends and family members with more financial resources to support a home purchase . This can happen informally , like with gifts to put toward a down payment or closing costs , but support can also come in the form of a co­signer on a mortgage loan . Co­signers are people who agree to be responsible for loan payments if the primary signer defaults . Because co­signers ’
financial resources and credit history are also evaluated as part of a loan application , this helps buyers with low incomes , more debt , or a patchy employment history increase their likelihood of qualifying for a loan and receiving lower interest rates or higher approval amounts .
Young buyers appear to be relying on older co­signers simply to enter the housing market , rather than using co­signers ’ financial assistance to purchase more expensive homes . This is evidenced by similar property values and down payment amounts across young buyers with and without older co­signers , according to data from the Home Mortgage Disclosure Act . The median property value and down payment for young buyers with an older cosigner is $ 295,000 and $ 40,000 , respectively , compared to $ 285,000 and $ 30,000 for all young buyers . But both groups of buyers lag behind typical figures overall : for all buyers , the median property value is $ 325,000 , and the median down payment is $ 50,000 .
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