News & Information

The Current Housing Market and Today’s Homebuyer

by LenderSelect Mortgage Group May 22, 2018

Today’s Buyers

The Local Market

Across the country, there is a significant variation in income, and with that comes a big disparity of how much homebuyers can afford when looking to purchase a new house. In fact, according to Zillow’s Consumer Housing Trends Report 2017, the median home purchase price in the Southeast is $222,508, while the median purchase price in the West is $388,998 – a whopping $166,490 more! Despite this cost difference, the average income is just $18,248 higher in the West. For many buyers, purchasing a home on the West Coast brings with it additional affordability challenges that buyers in other regions (especially the East and Midwest) may not face.

The National Market

And while it is critical to know your local market, it is also valuable to identify trends nationwide to effectively market your mortgage products and programs and prepare your business to assist the next generation of buyers. Zillow reports that 76% of consumers believe offering a loan program that meets their needs is very important when looking at a lender – and to do this, you will need to know your audience and what they are seeking. According to Zillow, 42% of all buyers nationwide are Millennials (ages 18-37) followed by Generation X (38-52) at 29%. Brian Buffini’s 1st Biannual Real Estate Report highlights that 92% of borrowers decide to go with a fixed-rate mortgage and 58% of all buyers chose a conventional loan. The median household income of all buyers hovers at $87,500 with nearly half of individuals having at least a bachelor’s degree, according to Zillow’s report.

Current Challenges


The current housing market differs drastically from region to region. For example, prospective buyers in Virginia are actively searching for homes to buy, but there is limited availability. Central Florida is also facing extremely tight inventory, which has caused the prices of homes for sale in the region to increase dramatically – to nearly the same level as prices at the peak of summer 2007. As a result, the market has reached an equilibrium of sorts and houses are staying on the market due to a lack of qualified buyers that can afford these homes.

The Midwest and Northeast have been more stable with an abundance of residual inventory; however, most of this is likely due to the bad weather conditions these regions have faced in recent months.

Interest Rates

The Federal Reserve has plans to re-evaluate interest rates at least four times in 2018, with an additional re-evaluation possible. This could drive interest rates up even more quickly, creating some volatility in the interest rate environment. As of January 2018, the Mortgage Bankers Association (MBA) predicted the 30-year fixed-rate mortgage interest rate would rise to a 4.8% average this year.

How to Combat Challenges and Successfully Reach Buyers

The MBA has also predicted a 29% decrease in refinances in 2018 as compared to the previous year and a sharp move toward a purchase market. To capture new homebuyers, it is more important than ever for community lenders to adapt their business to remain competitive within the mortgage industry.

What actionable measures can be taken to effectively market to homebuyers?

Offer a Variety of Loan Products and Programs

Our society is becoming more diverse, which means it is more important than ever to expand your mortgage offerings to meet the needs of all borrowers. A greater variety of loan products and programs means you can provide a greater segment of the population with the opportunity to reach their homeownership goals.

Work with an Investor Who Can Deliver Timely and Accurately

There are a significant number of participants involved in completing a mortgage loan, so it is important to work with a reputable investor who can facilitate other parts of the transaction to keep the process on track to close the loan in a timely manner. It can be time-consuming and inefficient to manage the mortgage process independently. It is critical to choose an investor with the ability to provide service, accuracy and quality throughout the various phases of the transaction. After all, service is remembered long after price is forgotten.

Work with Local Real Estate Agents

According to the aforementioned Zillow report, 74% of consumers rely on agents to find their homes and over half (53%) only reach out to a single agent. Also, 52% of buyers make a decision to work with an agent based on a personal referral. That is where developing relationships with real estate agents in your area will be key as we shift toward a purchase market. Making every resource that your customers need available up front can keep the home buying process running smoothly from start to closing.

The real estate market is ever evolving, and it is vital to stay ahead of the curve to meet your borrowers’ needs. And of course, you must understand exactly who your target borrower is and ensure you are offering the mortgage options they are seeking in order to successfully reach them and remain a competitive force in the mortgage industry.  Learn more >>