RUTHERFORD COUNTY, TN - According to the National Association of Realtors, the average age of first-time homebuyers is 36 years old, which means that the millennial generation—generally regarded as individuals born between 1981 and 1996—has reached the stage in their lives where buying a home is often a top priority. Yet recently, the cost of homeownership has skyrocketed in large part due to an adverse combination of high interest rates and scarce inventory, leaving millennial's with a daunting homeownership outlook.
Rutherford County Property Assessor Rob Mitchell commented on millennial's buying their first home... In order to cope with rising prices, millennial's are taking out larger home loans. In 2022, the median loan amount for mortgages taken out by applicants age 25–34 was $315,000, and $365,000 for applicants age 35–44, higher than any other age group. Similarly, the loan-to-value ratio—or the amount of the mortgage compared to the sale price of the home—was 88% for 25- to 34-year-olds and 80% for 35- to 44-year-olds. Inherently, many millennial's are first-time homebuyers and typically have less existing home equity to apply to new mortgages. Additionally, millennial's are at the stage of their lives where they may be supporting a growing family and require more living space compared to older generations.
More on Millennial's Buying Homes - This difficult homebuying landscape has resulted in a dramatic shift in mortgage originations. Prior to the COVID-19 pandemic, U.S. mortgage originations were already on the rise—climbing from $344 billion in Q1 2019 to a 14-year high of nearly $752 billion in Q4 2019. After a brief dip due to pandemic-era stay-at-home orders and social distancing, originated mortgage volume skyrocketed to a new high of over $1.2 trillion in Q2 2021. This abrupt growth is mostly attributed to historically low interest rates, low inventory, and an increased desire for more space amid the pandemic, but these conditions were short-lived. Rapidly rising interest rates combined with other forces, such as return-to-office mandates, have brought mortgage originations down to under $324 billion in Q1 2023, the lowest it has been in nearly nine years.
Despite the overall decline in homebuying across the country, millennial's still account for the majority of home purchase loans in 2022. However, millennial home purchasing varies by location. millennial's in northeastern states account for the largest share of home purchase loans, with Massachusetts (64.5%), New York (63.8%), and New Jersey (63.0%) leading the country. Midwestern states such as Minnesota (62.9%), Illinois (62.6%), and North Dakota (62.4%) also rank among the top 10 states for millennial homebuying. On the other end of the spectrum, Delaware (41.1%), Florida (45.2%), and South Carolina (46.9%) have the lowest share of home purchase loans taken out by millennial's and notably have older populations.
To determine the locations where millennial's are buying homes, researchers at Construction Coverage, a website that provides construction insurance guides, analyzed the latest data from the Federal Financial Institutions Examination Council. The researchers ranked states according to the millennial share of conventional home purchase loans originated in 2022. For the purpose of this analysis, millennial's were considered to be those age 25–44 in the year 2022. In the event of a tie, the location with the greater total number of millennial home purchase loans was ranked higher.
The analysis found that millennial's took out 55.5% of home purchase loans in Tennessee last year, with a median loan amount of $325,000.
Here is a summary of the data for Tennessee:
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Millennial share of home purchase loans: 55.5%
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Total millennial home purchase loans: 37,082
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Median loan amount: $325,000
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Median loan-to-value ratio: 84.0%
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Median interest rate: 5.00%
For reference, here are the statistics for the entire United States:
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Millennial share of home purchase loans: 57.8%
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Total millennial home purchase loans: 1,669,539
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Median loan amount: $335,000
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Median loan-to-value ratio: 83.1%
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Median interest rate: 4.99%
For more information, a detailed methodology, and complete results, see Where Are millennial's Buying Homes in the U.S.? on Construction Coverage.
