To some degree, the Millennial homebuyer market (especially the first-time homebuyer) must seem like the Holy Grail or a unicorn herd to mortgage lenders. It’s a large segment — about one quarter of the American population at about 80 million people. Some estimate that at about $200 billion in purchase power. Plus, it’s only now growing into its purchase potential. It’s reaching an average age when Americans traditionally begin purchasing homes. And yet, by all accounts, they’re not. Not yet.
The peripheral numbers add up for potential. The Deloitte Millennial Survey, 2016, asserts that Millennials want to, at some point, be homeowners.
However, a recent Forbes survey of influential Millennial-aged professionals suggests that Millennials are in no rush to purchase a home, even if it is a long-term goal. Only 19% told Forbes that their highest financial priority involved purchasing a home. Conversely, 44% stated that “funding an entrepreneurial venture” was, instead, their highest financial aspiration.
Similarly, the same survey suggested that, while 80% of respondents still “believe in the American Dream,” only 5% reported that they felt that dream was “owning your own home.” In contrast, 33% felt that “owning your own company” is, in fact, the American dream.
There are numbers to be found for and against the argument that Millennials will be settling into the role of traditional homebuyers any time now. However, what we do know for sure about this generation is that it isn’t like any previous consumer generation we’ve seen. As a result, it’s time to ask what — if anything — will provide the “typical” Millennial incentive to accelerate her home purchase plans.
So what do we know about the Millennial (or, at least, what seems reasonably established if we are to paint 80 million people with broad strokes)? A 2015 survey by Elite Daily set forth findings that seem to confirm some of the assumptions we’ve seen made about Millennials. Dan Schwebel, a contributor to Forbes, summarized some of these findings:
Millennials would rather buy a car and lease a house.
Millennials were hit hard by student debt, compounded by the consequences of the “Great Recession.” As a result, they tend to be debt-averse.
They are virtually oblivious to traditional advertising, preferring authenticity and referral to sales pitches and puffery.
They do not base purchases upon their potential, but rather need and value.
They expect brands to give back to society, but are loyal to brands that do.
They are early adopters when it comes to technology.
So what does this mean for those seeking to sell mortgage loans to Millennials?