Up until this point, neither pandemics or disruptions in economies appear to have any effect upon the surge of buyers in the real estate market throughout 2020. At perhaps no other time in recent memory have prices escalated at such an aggressive rate. In many markets, the average price for a home has increased 20-29% in just 12 months.
Such economic anomalies cannot be expected to continue much longer at the present pace. But there are other factors that will move into this mix of demand, inventory supply shortages, and low interest rates, that being the pent-up demand of Millennials compounded with their improved credit scores.
According to the 2020 Consumer Credit Review, the average FICO score for consumers hit a new record of 710 in 2020. The market segment that led the way to this new high was Millennials, those individuals born from 1981 to 1996. Their average credit score increased by 11 points from 668 to 679.
The generation that scored the highest average score, as expected, was the Silent Generation with an average credit score of 758.
The improvement in the FICO scores for Millennials will clearly enable them to secure mortgages at more attractive rates and with greater speed.
With greater borrowing power, Millennials will clearly be motivated to make their first purchase as quickly as possible, before the limited inventory makes buying their ideal home impossible.
Real estate agents should be encouraging prospective Millennial buyers to do all they can to improve their credit scores, as it will affect the interest rate that they pay for their first home.
Some of the ways that individuals can improve their credit score can be as simple as making their credit card payments on time. Payment history clearly is being factored into anyone’s credit score. By only paying the minimum, the agencies rating credit will consider for such payment extensions as problematic.
Another tip to increase the credit score is to pay the balance in full each month. This keeps your total available credit higher.
If you have any questions about this information or title insurance, please contact Ralph Aponte: 732.914.1400.
Counsellors Title Agency, www.counsellorstitle.net, founded in 1996, is one of New Jersey’s most respected title agencies, serving all 21 New Jersey counties with title insurance, clearing title, escrow, tidelands searches, and closing and settlement services for commercial or industrial properties, waterfront properties and marinas, condominiums, townhouses or residential single family homes. Counsellors Title also features its own Attorney Settlement Assistance Program™ [ASAP], which is an individual resource customized to fit the needs specifically of real estate attorneys, including, Documentation, Preparation, Disbursement of Funds, Attendance at Closing, HUD Preparation or Post-Closing Matters.
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