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U.S. home values are at the highest they’ve ever been — and to afford the costs, some Americans would even be willing to give up a constitutional right.
Twenty-two percent of Americans say they would give up their right to vote for a 10 percent down payment on a home, says a study from home financing site Unison.
Fastest rising costs in 12 years
This past year, home values went up by 8.7 percent. Home values haven’t increased at that fast a pace since 2006, shortly before the housing bubble burst. At the time, prices were going up 9 percent every year, and then home values took a dive in 2008. After they bottomed out in 2012, values started to rise again.
In 2015, CNBC reported that, “some claim the housing market is in a bubble far worse than the devastating one in 2006.” Home values had only increased by 7 percent from the year before in 2015.
Housing supply is now down 20 percent since last year, and has dropped 35 percent lower than 2012, according to Realtor.com. That’s a big contributor to rising prices. At this rate, 73 percent of Americans predict home prices to rise higher next year, and 65 percent expect mortgage rates to follow suit.
Economists suggest that low housing supply shows a need to increase housing construction, but limited access to workers and rising building material costs could hinder progress.
“Home values are rising faster than we’ve seen in a very long time: The spring home shopping season has been a perfect storm of strong demand and tight supply,” says Zillow economist Aaron Terrazas. “Sluggish new construction has exacerbated the supply situation and homes that are hitting the market, are moving very quickly once they do.”
Millennials are buying homes
Terrazas suggests the economy and recent tax cuts from the Trump administration are driving more Americans to buy homes. Even among millennials who have rented for so long.
“Americans are also in a spending mood, boosted by recent tax cuts and rising wages,” Terrazas says. “Millennials who long-delayed becoming homeowners, are out in force — a shift we’re also seeing in softer rent appreciation.”
But low housing supply and increased home prices are making millennials the generation most desperate to buy a home. Twenty-six percent of millennials would give up their right to vote in the Unison survey, compared to 20 percent of Gen Xers, and only 7 percent of baby boomers.
Sixty-seven percent of Americans believe they can afford to buy a home in the next two years with less than $7,000 saved. But Unison points out many respondents didn’t take into account debt like student loans, credit cards, and auto loans.
Millennials have the least saved to put down on a home. When asked if they had at least $7,000 saved for a home, only 27 percent of millennials said yes, compared to 37 percent of Gen X, and 54 percent of baby boomers. That’s not mentioning that millennials are the generation deepest in student debt.
“Millennials want to buy, but record-low inventory is making it extremely difficult,” says Realtor.com chief economist Danielle Hale. “Despite the difficulties, first-timers are optimistic and more than willing to weather the challenges this spring has to offer.”
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