October pending sales dip, but still up year to year

Posted in Economics, Housing Recovery, National Real Estate | 45 Comments

From Reuters:

U.S. pending home sales post surprise drop in October

Contracts to buy previously-owned U.S. homes unexpectedly fell in October, dropping to their lowest level in four months and casting a shadow over the housing market’s recovery.

The National Association of Realtors said on Wednesday its Pending Home Sales Index, based on contracts signed last month, dropped 1.1 percent to 104.1.

Economists polled by Reuters had forecast pending home sales rising 0.5 percent last month. These contracts become sales after a month or two. Contracts rose in the Northeast, but fell in the South, West and Midwest.

Compared to October of last year, contracts were up 2.2 percent. The level of contracts signed in September was revised slightly higher.

Home prices continue to slow

Posted in Economics, Housing Recovery | 99 Comments

From the WSJ:

U.S. Home Prices Decelerated Further in September, Says S&P/Case-Shiller

The yearly growth in home prices across the U.S. decelerated further in September, according to a home price report released Tuesday.

The home price index covering the entire nation increased 4.8% in the 12 months ended in September, said the S&P/Case-Shiller Home Price Index report. That is down from 5.1% in August.

The home price index covering 10 major U.S. cities increased 4.8% in the year ended in September. The 20-city price index was up 4.9%. That is down from 5.6% in August but slightly above the 4.8% expected by economists surveyed by The Wall Street Journal.

On an unadjusted basis, the 10-city and 20-city gauges were unchanged in September from August, while the national index slipped 0.1%. S&P said that was the first national decline since November 2013.

Seasonally adjusted, the U.S. index increased 0.7% in September, while the two city composites each rose 0.3%.

The slowdown reflects the lackluster pace of home demand as buyers are constrained by stagnant pay growth and tight lending conditions as well as lingering financial problems for some households even years after the recession.

“The overall trend in home price increases continues to slow down,” said David M. Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices.

“Other housing statistics paint a mixed to slightly positive picture,” he said, pointing to increased housing starts and a reduced mortgage default rate. “With the economy looking better than a year ago, the housing outlook for 2015 is stable to slightly better.”

September Case Shiller

Posted in Economics, Housing Recovery, National Real Estate | 114 Comments

Case Shiller Day – Not that anyone is going to talk about it…

Low rate burnout?

Posted in Housing Recovery, Mortgages, National Real Estate | 84 Comments

From MarketWatch:

Fannie cuts mortgage-rate outlook, but home buyers may not bite

Mortgage-finance giant Fannie Mae cut its outlook Thursday for home-loan rates in 2015, but cheap monthly payments may do little to bump up residential sales, experts said.

The federally controlled mortgage buyer’s latest housing-market forecast pegged the rate for the popular 30-year fixed-rate mortgage next year at about 4.3%—a drop of two-tenths of a percentage point from Fannie’s prior forecast for the rate in 2015.

While lower rates translate into smaller monthly loan payments, making homeownership more affordable, Fannie FNMA didn’t adjust its forecast for next year’s total home sales.

“The housing market continues to grind its way upward, but we don’t expect a breakout performance in 2015 as the fundamentals remain somewhat muted,” said Doug Duncan, Fannie’s chief economist. “We believe that mortgage activity in 2015 will be very similar to 2014.”

There are (at least) three remarkable mortgage-market trends that are shaping home sales, and some of them are working against each other. First, rates are super low. The latest weekly reading from Freddie Mac showed that the average rate for a 30-year fixed-rate mortgage recently hit 3.99%—a sixth consecutive week of near-4% readings—far below an average of more than 7% over the past three decades.

“This period of low interest rates is extraordinary,” said Susan Wachter, a housing-finance expert at the University of Pennsylvania.

Second, rates have remained in a fairly narrow band for some time. Over the past three years, the rate for a 30-year fixed-rate mortgage has ranged from about 3.35% to almost 4.49%. If Fannie’s Duncan is right, the market won’t see rates climb much higher next year from recent levels.

But another year of low rates may not have much of a positive psychological impact on prospective home buyers, said David Crowe, chief economist at the National Association of Home Builders.

“The relatively lower rates after the spikes of the early 80s did stimulate buying,” Crowe said. “This time around, the low rates are still not as low as they [recently] were so the relative advantage is not as great.”

By the hour

Posted in Economics, General, Humor, Unrest | 44 Comments

From HousingWire:

Realtors don’t deserve 3% commission?

Should Realtors and other real estate agents be just paid hourly, or should we stick with the 3% commission?

Some posts on other forums suggest paying Realtors by the hour.

Really? Really.

Look, 3% seems like a lot of money given that median home prices are north of $230,000. Showing a few properties, sitting through the signing – does that really deserve that kind of commission?

And with online listings services growing so much, most of the work is done by the house hunter long before they hire that blazer-clad thousand dollar smile.

I get that dry cleaning for those gold blazers and all that hair spray and those scarves cost a lot, but come on.

So what? $25 an hour plus gas seems fair, right?

I mean, nurses make $25 an hour and they have to deal with sick people.

So why so greedy, Realtors?

OK, ask a lot of buyers if that 3% commission seems fair and if they’d pay their Realtor by the hour, and that’s typical of the response you’d get.

But the fact is, I can say something that real estate agents can’t say aloud: Buyers can be stupid.

They don’t see the hours of market research that goes into every transaction. They don’t see the hours whittling down lists of potential properties to a manageable number so that clients don’t have to spend every hour of their weekend looking at properties.

They don’t see the time spent marketing properties that are for sale.

They don’t see how many buyers and sellers end up changing Realtors for no good reason, or who end up not buying or selling at all.

That’s not a little thing – if an agent spends 30 hours on a client who ends up not buying, they have to make up that lost income, so it’s built into that commission for sales that do get closed.

But consider the world of hurt opened up if Realtors and agents started charging by the hour. They’d have a great incentive to drag their heels, to be scattershot in looking at properties, and to drag out closings.

Ever wonder why attorneys just love how protracted legal proceedings are?

There’s no law that says agents have to be compensated with 3% commission. It’s up to them and their brokerage. There are a few companies out there like Redfin and Surefield breaking the mold.

And no one says you have to use a Realtor or real estate agent. But as with most any other high-information professional transaction, you’d be a fool not to have representation on your side of the table.

That 3% is a painless payment. It buys you market information, advice and experience that you can’t get shopping listings in your pajamas on Zillow or Realtor.com.

You may be a self-taught expert in your mind, but in reality even experienced lawyers hire other lawyers to represent them in court.

Home sales hit 1 year high

Posted in Demographics, Economics, Housing Recovery, National Real Estate | 187 Comments

From the WSJ:

Existing Home Sales Rise as Recovery Regains Momentum

Sales of existing homes rose in October to their highest level in a year, the latest sign of the U.S. housing recovery shaking off the shock of last year’s jump in mortgage rates.

Sales of previously owned homes climbed 1.5% last month to a seasonally adjusted annual rate of 5.26 million, the National Association of Realtors said Thursday. September’s sales pace was revised up slightly to 5.18 million.

It was the sixth time in seven months that sales rose from the prior month. Sales in October were up 2.5% from a year earlier, the first time this year that sales rose instead of fell on an annual basis. Last month’s sales pace was the highest since September 2013.

Existing-home sales, which make up roughly 90% of U.S. home purchases, tumbled following a mid-2013 jump in mortgage rates. But the sector has regained traction in recent months as mortgage rates have eased.

Prices still are rising, but their growth has moderated this year. The median sale price for a previously owned home in October was $208,300, up 5.5% from a year earlier but below the 11.5% increase seen in 2013 from the prior year.

In October, existing-home sales rose in the Northeast, Midwest and South but declined in the West, according to the Realtors group.

The inventory of homes available for sale was up 5.2% last month from a year earlier. At the current sales pace, it would take 5.1 months to exhaust the supply of homes on the market.

Warren goes for the throat

Posted in Foreclosures, Mortgages, Politics | 92 Comments

From HousingWire:

Sen. Warren accuses FHFA’s Watt: “You haven’t helped a single family”

What started as a dry, lame-duck session hearing on the Federal Housing Finance Agency in the Senate Banking Committee on Wednesday, got heated when U.S. Sen. Elizabeth Warren, D-Mass., went guns blazing after the FHFA director.

Warren, an outspoken progressive and a likely candidate for the 2016 Democrat presidential nomination, went on the attack during FHFA Director Melvin Watt’s first hearing before the committee, saying that he’s never done anything to help homeowners who are underwater and facing foreclosure.

“Five million families lost their homes during the financial crisis and millions more are still struggling,” Warren said, prefacing her questions to Watt. “According to the latest data from CoreLogic…another 5.3 million homeowners remain underwater on their homes. And people are continuing to lose their homes every day in foreclosure.

“We talk a little bit about the law here, now one of your duties under the law. One of your duties is to conserve the assets of Fannie and Freddie, but another duty given equal importance by Congress … is to implement a plan that seeks to maximize assistance for homeowners and take advantage of available programs to minimize foreclosures,” Warren said.

“The Treasury Department has found that principal reductions could save Fannie and Freddie nearly $4 billion and help half a million homeowners stay in their home,” Warren said. “It has been six years since Congress created FHFA and in all that time your agency has never, not once permitted a family to reduce its principal mortgage through Fannie or Freddie.”

A clearly frustrated Warren continued.

“I’ve asked about this repeatedly and you’ve said you’d look into allowing Fannie and Freddie to engage in principal reduction; you said it again today,” Warren said. “You’ve been in office for nearly a year now and you haven’t helped a single family, not even one, by agreeing to a principal reduction. So I want to know why this hasn’t been a priority for you. The data are there.”

Watt appeared a little shaken by the line of attack.

“It’s probably an overstatement to say it’s not been a priority,” Watt stammered. “It’s just a very difficult issue. …”

Warren cut him off.

“Chairman Watt, you have had a year to do that, you have known for five years before that what the problem was, we have two studies coming out showing that Fannie and Freddie could make money by doing this,” she said.

Watt stammered in response.

“We are going to have an answer sooner – it won’t be as long as it has been…” he said.

Warren interjected, “How many more people have to lose their homes before we get there?”

Watt said that he couldn’t or wouldn’t take responsibility for what happened in the five years before he assumed the director’s chair at FHFA.

“But you’ve been there a year,” Warren interrupted.

Warren again interjected.

“Indeed, how many families has it affected?” she demanded.

“It has affected a number of—”

Warren cut him off.

“This is not a program producing money for Fannie and Freddie but it is causing a lot of pain for families who were already victims,” she said.

Your commute is about to get shorter

Posted in Economics, Employment, North Jersey Real Estate | 150 Comments

From the Record:

Cash vs. cachet: N.J. eager to lure NYC firms

Two days after JPMorgan Chase said it had dropped plans to build two new office towers for $6.5 billion in midtown Manhattan, reportedly because New York City refused the company’s request for tax breaks, New Jersey’s economic development team sprang into action.

A letter from Lt. Gov. Kim Guadagno, Governor Christie’s jobs czar, went out to 275 financial services companies in New York and Philadelphia, touting the “benefits of investing in New Jersey.”

Listing 16 companies that have invested in the state, among them Goldman Sachs, Merrill Lynch, and UBS, the letter asked, “What do companies like [these] know that you do not?”

Answering her own question, Guadagno cited New Jersey’s “highly educated workforce,” communications infrastructure, and “new, game-changing tax incentives aimed at attracting and growing businesses.”

The mailing included a copy of a Wall Street Journal article quoting New York City Mayor Bill de Blasio saying that the amount of incentives JPMorgan had requested from the city — which news reports put somewhere between hundreds of millions of dollars and $1 billion — was a “non-starter.” It added that on the campaign trail, de Blasio “took a strong stand against subsidies for larger corporations.” The letter helpfully provided Guadagno’s cellphone number.

The swift offensive reflected a growing belief among the New Jersey development community and state officials that the New York City mayor’s apparent reluctance to lure or keep companies with tax breaks presents a golden opportunity.

To be sure, de Blasio is operating from a position of strength. While New Jersey has recovered only half the jobs lost after the Great Recession, New York City recovered all the jobs lost by March 2012 and since added 225,000 more. And despite its sky-high rents, the financial capital of the world continues to attract top corporations.

Still, New Jersey real estate experts believe that the combination of New Jersey’s revamped and far more generous incentive programs, and de Blasio’s resistance to helping corporations with taxpayer money, could steer New York-based companies, or those looking to come there, across the Hudson River.

CRDA Wins Eminent Domain Case

Posted in Politics, Shore Real Estate | 83 Comments

From the APP:

Judge: New Jersey can take piano tuner’s home

An Atlantic City piano tuner cannot stop the Casino Reinvestment Development Authority from taking his family home, a state judge ruled Monday.

Superior Court Judge Julio Mendez, who heard final arguments in an Atlantic City courtroom last month, ruled that the state agency can use eminent domain to seize the house in the shadow of the closed Revel Casino Hotel, citing an “appropriate public purpose” for the property.

Owner Charlie Birnbaum, 67, doesn’t live in the three-story brick house on Oriental Avenue, but he is there often. He uses the first floor of the building — bought by his parents in 1969 — for his piano-tuning business and rents the top two floors to tenants. The house is one of the few inhabited buildings on the block and overlooks a large swath of vacant land.

Robert McNamara, an attorney representing Birnbaum from the Virginia-based Institute for Justice, has argued that the CRDA doesn’t have specific plans for the land, other than take it and “think really hard about what they’re going to do with it.”

The CRDA argued that it needed the property to create a tourism district and that it is not obligated to disclose what specific stores will occupy the property, court records show. Stuart Lederman, an attorney for the CRDA, said Monday the ruling “upheld the broad powers” that the CRDA has and will allow the agency to continue revitalizing Atlantic City.

McNamara, meanwhile, said the ruling paves the way for an “appalling and outrageous scope of power for any government entity.” He said Birnbaum intends to appeal.

“It’s not an opinion we intend to let stand,” McNamara said. “The upshot of this opinion is that the CRDA can take anything it wants for any reason or no reason. If this ruling stands, there is literally no piece of property in Atlantic City that is safe from the whims of government officials.”

In his opinion, Mendez said the court recognizes Birnbaum’s connection to the property but that the CRDA provided an acceptable level of detail in its plans for the area.

“The court acknowledges and empathizes with the Birnbaums’ desire to keep this family owned property,” he wrote. “On the other hand, the court is satisfied that the CRDA is acting within the statutory framework and objectives of the New Jersey legislature.”

Living Downtown

Posted in Demographics, Economics, New Development, New Jersey Real Estate | 84 Comments

From the Record:

Bergen County’s suburbs embrace a touch of the city 

Robert Weiner, co-owner of the Bruce the Bed King mattress and furniture store on Hackensack’s Main Street, last week took his 96-year-old father to see a first in the 60 years since his family opened its store — a 222-unit apartment building rising on State Street, a block from downtown.

That project and two others that will put an additional 700 apartments on Main Street are the result of zoning revisions that Hackensack put in place two years ago and the first signs of a policy shift that could produce the biggest transformation of North Jersey’s downtowns since the arrival of the malls pulled shoppers away from town centers in the 1960s and 1970s.

A growing number of North Jersey municipalities, like Hackensack, believe that adding rental apartments in their downtowns is the key to revitalizing their Main Streets. Not everyone, though, is convinced that downtowns and residential apartments are a perfect fit.

North Jersey, and particularly Bergen County, was an example of suburban prosperity in the latter part of the 20th century, typified by single-family homes and shopping centers along highways. But now North Jersey’s suburbs are responding to a 21st-century sensibility of millennials — those between the ages of 18 and 33 — who want to live in urban environments such as Hoboken or Brooklyn, as well as aging suburbanites who want to downsize without leaving their hometowns.

Demand for rental apartments, especially near train stations, is driving the change. “People want to live in places where they have that downtown, where they can live close to things that they’re going to eat and things that they’re going to buy, and the market is following,” said Maggie Peters, director of the Bergen County Economic Development Corp. Developers, she said, have known this already “and now municipalities are starting to react.”

James Hughes, dean of the Edward J. Bloustein School of Planning and Public Policy, and co-author of “New Jersey’s Postsuburban Economy,” which includes those findings, said North Jersey’s downtowns in a sense are getting back to their roots by adding residential.

“In the very early downtowns, in the early part of the 20th century, the second and third floor above the retail normally was some kind of residential,” he said “That lost favor after World War II. They were converted to offices or left vacant.”

“Now,” Hughes said, “most planners would have no disagreement that it’s a good thing, because a lot of the retailing that takes place in those downtowns is local population oriented” — restaurants, dry cleaners and stores that draw from residents in the immediate area.

“To keep the retail happy, you grow the buying power by adding residential downtown,” Hughes said.

New Jersey towns such as New Brunswick, Rahway and Morristown have brought new residential units into their downtowns and seen stores and restaurants follow.

“There’s been a big movement toward developing downtowns and people moving back into downtowns, and it’s not something that’s happened just in North Jersey or just recently,” said Francis Reiner, Hackensack’s redevelopment consultant, and a senior urban designer at Hasbrouck Heights architectural firm DMR.

Since the 1970s, most North Jersey municipalities have restricted their downtowns to commercial uses. Now, municipalities as varied as Hackensack, Bergen County’s largest city, with a diverse population of 43,000 and a 39-block downtown that used to be the county’s shopping hub, to Ridgewood, a village of 25,000 with a downtown that strives to maintain a small-town feel, are rethinking their zoning.

Welcome to the top!

Posted in Foreclosures, New Jersey Real Estate | 43 Comments

From the Record:

NJ leads in foreclosure activity as mortgage trouble eases nationwide

New Jersey leads the nation in the rate of foreclosures started during the third quarter, the Mortgage Bankers Association said Friday.

Nationally, by contrast, the worst of the foreclosure crisis has passed, and levels of mortgage distress have returned to pre-recession levels.

More than one in six New Jersey mortgage holders is either in foreclosure or late on payments, the Washington-based mortgage group said. About 7 percent of mortgages in New Jersey were delinquent on payments at the end of the third quarter, while another 8 percent were in the foreclosure process. That’s down a bit from a year ago, but significantly higher than the national rates.

New Jersey has lagged behind the nation in resolving the foreclosure crisis because foreclosures in the state, as in about two-dozen states, go through the courts, which tends to slow down the process. In addition, the system is still catching up from a near-freeze in foreclosure activity in 2011, after questions arose about mortgage industry wrongdoing.

Nationally, the percentage of loans that were in foreclosure or seriously late on payments have returned to the levels of late 2007, just before the recession began, according to the mortgage bankers.

“We are now back to pre-crisis levels for most measures,” said Mike Fratantoni, MBA’s chief economist. “The loans that are seriously delinquent are primarily loans that were made prior to the downturn: 74 percent of them were originated in 2007 or earlier.

“Loans made in recent years continue to perform extremely well due to the improving market and tight credit conditions; loans originated in 2012 and later accounted for only 4 percent of all seriously delinquent loans,” Fratantoni added.

Monthly foreclosures jump. End in sight? Nope.

Posted in Foreclosures, Housing Recovery, National Real Estate | 92 Comments

From HousingWire:

RealtyTrac: Foreclosures increase for two months straight

Foreclosure filings, including default notices, scheduled auctions and bank repossessions, increased 15% from last month but are still down 8% from a year ago levels, RealtyTrac’s October Foreclosure Market Report said.

This is the largest month-over-month increase since U.S. foreclosure activity peaked in March 2010.

In October, a total of 59,869 properties were scheduled for foreclosure auction during the month, up 24% from the previous month and up 7% from a year ago to the highest level since May 2013.

Scheduled foreclosure auctions in judicial foreclosure states, where foreclosures are processed through the court system, increased 21% from the previous month and were up 3% from a year ago and.

Meanwhile, scheduled foreclosure auctions in non-judicial states increased 27% from the previous month and were up 14% from 2013.

But this news is not a significant surprise, Daren Blomquist, vice president at RealtyTrac, said.

“Over the past three years there has been an average 8% monthly uptick in scheduled foreclosure auctions in October as banks try to get ahead of the usual holiday foreclosure moratoriums,” said Daren Blomquist, vice president at RealtyTrac.

However, Blomquist added that the sheer magnitude of the increase this year demonstrates there is more than just a seasonal pattern at work.

“Distressed properties that have been in a holding pattern for years are finally being cleared for landing at the foreclosure auction,” he said.

In addition, scheduled foreclosure auctions increased from a year ago in 29 states, including Oregon (up 399%), North Carolina (up 288%), New Jersey (up 118%), New York (up 89%), Connecticut (up 60%) and Nevada (up 53%).

BEFORE it strangles the city?

Posted in Demographics, Economics, Employment, Foreclosures, New Jersey Real Estate | 74 Comments

From the Record:

Paterson’s foreclosures jumped by more than 500 percent over three years

City documents say a surge in foreclosures has cost Paterson’s municipal government about $12 million in tax payments over the past three years, part of an erosion of the tax base that officials warn could take decades to overcome.

The number of foreclosures in Paterson jumped from 75 in 2011, to 207 in 2012 and to 413 in 2013, the documents say. In addition to the $12 million in taxes lost to those foreclosures, Paterson last year also had to refund $9 million for tax refunds, the documents say.

That bleak scenario was outlined in the city’s 2015 application seeking Transition Aid from the State of New Jersey. The application says the foreclosures have resulted in an increase in the number of vacant properties in Paterson.

“Hence many neighborhoods throughout the city are experiencing vacant properties that bring more crime and deepen the urban blight syndrome,” reads Paterson’s Transition Aid application.

“What this means in the long-term is that the city will find it harder, even impossible, to recover its tax asset base,” says the application. “Once this happens, the recovery is slow at best and can take decades. We need to arrest this problem before it strangles the city.”

If Paterson received the full $27 million being requested, that would allow the city to avoid a municipal property tax increase for the current fiscal year. At present, the city’s preliminary 2015 budget would produce a 5.2 percent tax increase. But officials insist that number will be reduced no matter what.

Torres said he expected the ongoing property revaluation will help mitigate the foreclosure problem. Moreover, he said his neighborhood stabilization program – a plan under which the city would take control of abandoned properties and bundle them in deals with developers – would revive some struggling parts of the city.

Morris said the foreclosures were a symptom of bigger economic problems confronting Paterson. “I don’t think we’ll see an end to the foreclosure problem until we see an end to the unemployment problem,” Morris said.

Paterson has endured a steady succession of municipal tax increases, including a whopping 29-percent hike in 2011. Morris said the increase contributed to the rise in foreclosures, but he said “the banking industry played a bigger role.”

Come back in 3 years

Posted in Demographics, Economics, Employment, Housing Recovery, National Real Estate | 112 Comments

From HousingWire:

Zillow: Housing won’t normalize for at least 3 years

While a small percentage of people said they believe the housing market either already has returned to normal, or will in the next 12 months, 40% said it would take 3-5 years, which would be close to the ten-year anniversary of the financial crisis.

According to a recent survey by Zillow (Z) that interviewed 107 panelists, shifting demographics and would-be first-time homebuyers financially ill-prepared to buy will continue to hold back the housing market over the next several years.

The survey interviewed 107 panelists, asking them to predict the path of the Zillow home value index into 2019.

When asked when they expect the U.S. housing market to normalize, 30% of panelists said they expected the market to stabilize one to two years from now, and 40% said it would take 3-5 years. Just 20% said they believe the market either already has returned to normal, or will in the next 12 months.

“We’ve reached a point in the recovery where the only real cure-all is time,” said Zillow Chief Economist Stan Humphries. “The market remains very challenging for younger, first-time homebuyers who face an uphill battle saving for a down payment, qualifying for a mortgage and finding an affordable home to buy.”

But Humphries noted that it is not all bad news. “The landscape is slowly changing, as incomes begin to grow, negative equity fades and new households start to form. These shifts won’t occur overnight, but they are happening. Patience will be a virtue over the next few years as we wait for these traditional fundamentals to more fully take hold in the market,” he explained.

Additionally, panelists said they expect U.S. median home values to rise 4.8% in 2014, on average, to $176,760, and another 3.7% in 2015.

The national median home-price is predicted to exceed $196,400 – their 2007 peak –in February 2018.

Millennials the most important demographic?

Posted in Demographics, Economics, Employment, Housing Recovery | 186 Comments

From HousingWire:

Millennials still grapple with first-time homebuying

“Among primary residence homebuyers, the demographics have shifted dramatically, especially among first-time homebuyers, whose share of the market has dropped to its lowest level in decades,” said Jessica Lautz, director of member and consumer survey research for the National Association of Realtors. “We have also seen an increase in the median age and income of the average buyer, as well as in multigenerational household formations as adult children and elderly family members move back in with their families.”

Adult millennials, those aged 18 to 33, were a popular topic of discussion for the panel.

In 2014, millennials saw 60% better job growth than the U.S. overall and a drop in unemployment to 6%. This growth, along with improved economic opportunities, should encourage millennials to form households and buy homes in the coming years.

“Millennials are the largest generation of people in the U.S. and represent 60% of first-time homebuyers,” said Jonathan Smoke, chief economist for realtor.com. “They are also more likely than any other group to purchase a home in the next year.”

Tightened inventory, difficulty receiving credit and lower-than-average salaries have kept many of these buyers out of the market, but most economists see that as a temporary setback.

“It’s not that young people don’t want to purchase homes, it’s that they are delaying the purchase,” said Lisa Sturtevant, vice president of research for the National Housing Conference. “Many of the reasons millennials are not forming households or making purchases are economic, so as the economy improves, we should see this group become more of a force in the housing market.”

“They represented 37% of home shoppers this summer, and over the next five years this generation will make up two-thirds of household formations,” he said. “Between June and September 2014, over half of adults aged 21-34 visited real estate websites or mobile apps. And this is the cusp—get ready for the millennial wave to drive the housing market for decades.”