The 30-year fixed mortgage rate fell sharply this week, hitting a new record low at 2.67%. NAR forecasts the 30-year fixed-rate mortgage to average 2.9% and 3.0% in the first and second quarter of 2020, respectively.
There is no doubt that these ultra-low mortgage rates significantly lower the borrowing cost, making homebuying more attractive to renters. In the meantime, the share of Millennial renters that can afford to buy the typical home rose in 2019 by 9% and 3% compared to a year and 5 years earlier, respectively. With both wages and consumer savings rising during the pandemic, expect homebuying activity to remain strong in the year ahead.
However, affordability conditions vary by area and demographic. Fast-rising home prices seem to be eroding the benefits of these low rates in some areas, making it more difficult for some renters to accomplish their homebuying dream. Nationwide, 32% of Black millennial renters can afford to buy the typical home compared to 51% for white millennial renters. Respectively, 43% of Hispanic millennial renters can afford to buy the typical home.
Here are some metro areas where housing is more affordable for millennial renters in minority groups than nationwide:
- For Blacks: Columbia, SC (49%), Cleveland, OH (47%), Jackson, MS (46%), Greensboro, NC (45%), Memphis, TN (44%)
- For Hispanics: McAllen, TX (68%), Knoxville, TN (66%), El Paso, TX (60%), Detroit, MI (59%), Oklahoma City, OK (59%).