Why Millennials Should Not Be So Pessimistic About Homeownership

The Weekly Recap

Good morning and Happy Valentines Day! Inflation came in hotter than expected for January, unemployment is down as 143,000 new jobs were added. The 10Y yield surged the most since December but had no impact on rates this week, Jamie Dimon does not like WFH at all, DOGE is still running full speed, there will be no more new pennies minted, good luck finding eggs at Costco and if you’re single in NYC its totally your fault.

If you missed last weeks newsletter Where Can You Identify Leverage In a Real Estate Negotiation, you can read that through the link.

Why Millennials Should Not Be So Pessimistic About Homeownership

Millennials have good reason to be frustrated by the housing market. According to a new study reported by the Associated Press, only 21% of Millennials think its possible for their generation to buy a home. That number has dropped by more than half since 2024 when 52% thought home ownership was within their reach. Even with this sentiment there is reason to not be entirely pessimistic.

Markets are cyclical and go through highs and lows. In NYC we are currently on an upswing as activity, contracts and new listings are all up. This positive momentum is good for the marketplace and creates more opportunities in a more stable environment. There is no such thing as the “perfect conditions” to transact real estate. Even when rates were super low, the amount of competition in the marketplace drove prices up and bidding wars were happening for homes that in stable markets wouldn’t get a second look.

Rents continue to rise which may make home prices not seem that terrible. As monthly rents increase, it means that renters are paying for their landlords equity instead of building their own wealth. Buying, even in higher rate environments can still be a great strategic move with the right plan.

Interest rates will adjust but since they have seemed to level off, people have come to terms with the idea that rates will be between 6-7% in the short to medium term and have started to come off the sidelines. In economics, expectations play a huge role in how economies shrink or grow. The same goes for real estate. Now that rates aren’t such an unknown, the expectations of the market can be properly managed.

Long-term wealth creation is one of the most rewarding aspects of homeownership. When you ‘spend’ money on a downpayment for a house, you’re actually not spending anything. You are transferring liquid cash into a more solid, tangible asset that grows (in NYC) 2-5% a year. That cash now becomes equity (or an ownership stake) in an asset that you actually get to live in.

Rather than feeling defeated, millennials should focus on education, strategy and flexibility in their approach. With the right mindset, team and resources, homeownership is still within reach, it just might look a little different than previous generations.

Market Performance

Here are how some other indexes and asset classes have performed as of this morning’s opening bell.

NYC Market Update

Here is a view of new inventory that has come onto the NYC market over the past WEEK as well as newly signed contracts in Manhattan.

Mortgage Rate Update

The 30-year fixed-rate mortgage inched down again this week, hitting the lowest level of the year thus far. Rate stability has been benefitting potential buyers, as purchase demand is stronger than this time last year. Continued momentum in this direction is an indication that buyer activity should continue to grow into the cyclical spring selling season.

News You Can Use

• US Inflation Tops Forecasts, Bolstering Case for Fed to Hold Bloomberg

• Consumer Prices Rise 0.5% in January, Higher than Expected CNBC

• US Fourth-Quarter 2024 Earnings Growth Set to Be Highest in Three Years Reuters

• Hot US CPI Report Weighs on Outlook Bloomberg

• JPMorgan CEO Dimon Derides In-Office Work Pushback, Demands Efficiency Reuters

• US Added 143,000 Jobs in January as Jobless Rate Drops Axios

• JPMorgan Sees Investment Banking Fees Rising by Mid-Teens Percentage in First Quarter Reuters

• Key Takeaways from Fed Chair Jerome Powell’s Congressional Hearing CNN

• DOGE Efforts At Treasury Found Irregularities Bloomberg

• Here Is the Inflation Breakdown for January 2025 In One Chart CNBC

• Eggs-isential Inflation Scrambles Bond Markets Bloomberg

• Trump Directs Treasury to Stop Minting New Pennies CBS News

• Dating Coaches Advice to Single New Yorkers: It’s Not Them, Its You Gothamist

The Deep Insight

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