New research highlights the recent optimism about homebuying. But one group is growing particularly hopeful about the mortgage market: young, first-time buyers. 

Despite speculation that a difficult market might be keeping first-time borrowers down, what’s sparking renewed hope among potential Generation X, millennial and Generation Z homebuyers? And more importantly, how can lenders help?

Here are three key trends driving optimism for young, first-time buyers in today’s mortgage market:

  • The perception of finding the right home is improving: Overall, Americans are increasingly confident about finding the right house and positivity continues to climb. Since 2018, the percentage of prospective buyers who think the home search will get easier jumped 16 percent, according to a recent report. And among millennials, the perception of a simplified home search is even more positive than it is for Gen X, Baby Boomers and seniors. This may be due in part because of an improvement in the availability of homes, especially in the Midwest, South and West regions, according to the report.
  • Homeownership is an important part of future plans: In the next year, 20 percent of millennials are planning on buying a home. More importantly, over 75 percent of those making homebuying plans will be first-time buyers, according to the National Association of Home Builders (NAHB) Housing Trends Report. While these numbers are not exactly overwhelming, other data reveals that millennials and Gen Z renters have long-term homeownership aspirations with more than two-thirds expecting to purchase a home in the next five years.
  • Buyers are open to a wide range of properties: First-time buyers continue to struggle with the affordability of homes in their markets. The good news? Those who are looking to purchase in the next year are open to expanding their search to include different areas and existing homes (even smaller and older properties), especially when their pursuit extends for months.

Nurturing Optimism Among Young Borrowers

Young Americans may be more optimistic about the availability of homes – even including homebuying in their future plans – but their complex finances and unique needs contribute to their lagging enthusiasm about investing in homeownership. Though most young renters would prefer to own, they see tight credit and student debt obligations as a barrier preventing them from homeownership, said economists at the Federal Reserve Bank of New York. 

By addressing some of the challenges of young, first-time homebuyers, lenders can support and leverage their optimism to help them realize that homeownership is well within their reach. Mortgage professionals can help simplify the process and dispel common myths with:

As affordability continues to challenge the complex finances that characterize many young, first-time homebuyers, lenders and mortgage professionals can help educate them about the range of solutions available to them that provide efficiency and clarity in today’s market.