Despite housing recovery, young buyers in a tough spot

In the past several years, the housing market has recovered from the depths that it reached during the economic downturn. This blog has already featured a post about how both mortgage applications and housing sizes are on the rise. However, this has not occurred without some difficulty, and not everyone has been able to take advantage of the recovery.

According to a recent article on DS News, many older homeowners have benefited from recent increases in housing prices. Now that their existing homes are worth more, they have been able to sell and use the money to purchase new homes. This can be seen in the data: a report by global financial services firm BBVA Group found that 42 percent of residential home sales were made in cash in December 2013. Only 18 percent were made in cash the year before.

While this is good news for these buyers, it is less so for those who never owned a home in the first place. As the news source points out, young Americans are having a much more difficult time keeping up with rising home prices.

Economically, it is important for young people to move out of their parents' homes and start their own households. GDP growth actually depends on this, in part. But unless they see significant salary increases, it may not be feasible for many young people to buy their own home just yet.

Lenders are growing more confidant as the market improves, but they need to be aware of the precarious financial position that young, non-homeowners are in. That's why credit risk software is a useful tool for determining who should receive a mortgage.

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