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   ARTICLE   |   From Scotsman Guide Residential Edition   |   October 2016

Defying Millennial Misconceptions

The nation’s largest generation puts its stamp on the housing market

Millennials — those individuals born between 1980 and the mid-2000s — have been tagged with many descriptors: Gen Y, the Net Generation, the Boomerang Generation and Echo Boomers. In sheer numbers, millennials outnumber baby boomers and now represent the largest generation in the nation.

Older millennials are only now at the start of their careers, and their generation represents the largest demographic entering the housing market today. They are moving into the housing market later in life than did their baby-boom predecessors, however.

Millennials often are viewed as a new and mysterious breed because they have never known a world without computers. Not only have they had access to technology since birth, but during the past 20 years big leaps in technology have been achieved in what feels like the blink of an eye.

Who and what are millennials? How do mortgage professionals get in front of them, and why are they so different and more difficult to reach than any group the industry has encountered before — if, in fact, that’s the case? There certainly are some differences in how members of the millennial generation get their information, but there also are some pretty large gaps that are being overlooked in marketing strategies. Many of those gaps happen due to wrong assumptions being made about this group.

Myth busting

Millennials are likely the most researched and measured generation in history. Still, there are many stereo-types that persist about them that simply don’t hold up to scrutiny. One misconception is that millennials are not interested in purchasing homes. This is not the case. A survey by Apartment List, an apartment-rental marketplace, shows that 74 percent of millennials plan to purchase a home, only 9 percent plan to always rent and 17 percent are unsure.

There are a few reasons that purchasing a home is happening later in life for many millennials, however. College is one of the big factors. More and more, high school graduates are choosing to go on to college, and later graduate school. Often, along with the years committed to college come years of student-loan debt. While the debt itself, in many cases, would not preclude an individual from purchasing a home, many millennials see it as a hurdle or a stopping point in terms of homeownership.

The second driver of delayed home purchases for millennials is that getting married and starting a family is happening further down the road for members of this generation. A Pew Center study revealed that 24 percent of women and 30 percent of men under age 34 are married, which is about half the number recorded for that age cohort in 1940.

In addition, the Centers for Disease Control and Prevention reports that childbirth rates for women under age 30 are at record lows, while the rate for women 35 and older who are having their first child is rising. Given home-purchase decisions often dovetail with decisions about marriage and having children, it is no surprise that millennials, as a group, are late bloomers with respect to the housing market, when compared with their parents’ generation.

Another misconception is that millennials don’t want to move out of the city. It’s not that simple. The reality is that when the time comes to consider purchasing a home, some millennials will choose to stay in, or move to, a city, while many more will likely opt to move to the suburbs.

In fact, more millennials want to live in single-family homes in the suburbs or rural areas than want to live in the city center — by a nine-to-one margin, according to a National Association of Home Builders survey. That preference is being driven largely, the study shows, by the desire of millennials to have more living space than is currently available to them.

Relationship business

The way millennials engage in the homebuying process has changed because of technology, compared to the days when their parents were entering the housing market. Just as in the past, the initial recommendations from family and friends carry significant weight in the selection of a mortgage originator. From there, however, the search may continue and be strengthened online. The importance of a mortgage company or professional having an online presence, consequently, cannot be understated.

It makes sense to be sensitive to the technological sophistication of millennials. To build an interpersonal comfort level and establish standing as an expert, however, originators should not rely on texting exclusively in communications with millennial clients — even if many millennials tend to have a higher comfort level with text messages.

It’s still important for originators to meet face to face with clients, including millennial borrowers, or to address some concerns over the phone in order to avoid potential miscommunication or misconceptions down the road. Tone, inflection and making a human connection matter in many conversations on important matters, and those simply can’t be conveyed adequately via a text or e-mail.

•  •  •

Millennials represent a major source of new business for the mortgage industry. They now represent one-third of the total U.S. population, and each year more of them are entering the housing market. Working with millennials may be different in some ways from working with individuals from prior generations, such as baby boomers. Regardless, the mortgage industry is still a relationship business, and millennials, like all humans, value personal connections. Originators who find ways to foster relationships with their current and past clients, including millennials, will see their business continue to grow.



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