Millennials Actually Feel Good About Housing Market

Millennials think now is a good time to buy a home, research from real estate platform realtor.com shows, even as rates are at historic highs and home prices remain elevated.

Fifty-five percent of those age 27 to 42 say now is a good time to buy a home, compared to 40 percent of Gen Zers—age 18 to 26—and 32 percent of Gen X, those over 40 and under 60, according to realtor.com.

The "bullish" attitude by millennials on the prospect of buying a home comes at a time when mortgage rates have hit above 7 percent for the first time in two months after declining from their two-decade highs in the fall. Meanwhile, the price of a home is now close to 7 percent higher than a year ago.

But that does not appear to scare away millennials, according to realtor.com. Nearly 50 percent of those polled say that they are willing to take the plunge into homeownership even if mortgage rates soar above 8 percent. About 40 percent of Gen Zers said they'd also buy property at those rates.

"Younger respondents tended to be more willing to move forward and bullish on purchasing a home, even given tough housing conditions," Hannah Jones, senior economic research analyst at Realtor.com, wrote on the site.

Forty-three percent of millennials also say that they will be able to afford a home within the next year and another 32 percent believe they can acquire a house over the next five years.

"Older generations are more likely to already own homes, so are not as optimistic about buying a new home in the short term," Jones said.

The optimism from potential homebuyers comes at a time when mortgage applications tumbled by double digits on the back of rates rising above 7 percent for the week ending February 16, the Mortgage Bankers Association's latest weekly survey showed on Wednesday.

A slight decline in mortgage rates would improve the affordability of a home by thousands of dollars, according to realtor.com. Jones points out that if rates fell by half a percentage point from their current levels, it would reduce $43,000 in total from the monthly payments a homeowner would have to pay over the course of a 30-year fixed rate mortgage for a median priced home of $410,000 with a 10 percent downpayment.

Realtor.com forecasts rates would end the year at 6.5 percent, Jones said in her note.

Interest rates on home loans did fall to the mid-6 percent range but inflation staying elevated has investors expecting the Federal Reserve to keep the costs of borrowing elevated for longer to bring prices down to its 2 percent target. But policymakers have indicated that they are done with hikes and are likely to slash rates sometime this year, which would in turn help bring mortgage costs down.