What makes Millennials a different Homebuyer?

Is the millennial generation really different from the baby boomers in how they will enter the housing market? What are some root causes for how they would be a different type of consumer? I recently attended an insightful presentation from a professor at Vanguard University that could give us a more in depth view of our largest new homebuyer (ages 18-36).

The first factor that impacted me, was the reality that the “Millennials are the first generation that has not needed an authority figure to gain access to information”. This is actually very significant in how they approach home shopping and mortgage selections.  Using social media to learn about the home search and purchase process has eroded the influence of the realtor. Also, shopping their mortgage advisor by visiting a multitude of sources.

The second major insight for me was the millennial home buying time frame is much later in age than the boomer generation. “The new separation from parents has moved from 18-21, to 26-28, when they no longer are covered by parents insurance”. They are entering the workforce later, marriage and the family dynamic is more likely starting in the mid 30’s. In addition, one in five are from single parents; three in five have working mothers. All seem to desire a more diverse community experience than the boomer generation.

In working with the millennial generation in mortgage finance, they will want to be more involved and educated throughout the process. They eventually will be bombarded with options from other lenders and friends as they enter the home buying market. They will be more open to buying with co-borrowers, and sometimes even friends, to get into these expensive purchases. Many still have memories of the mortgage crisis and the impact on their parents. The challenge of increasing college debt also makes them delay purchases and look to manage risks more carefully.

The final distinction regarding the millennial generation is that “ambiguity is their kryptonite”. They desire constant feedback, both positive and constructive. They seek out independent validation on their decisions, and question the process to a much higher degree. Social media has provided millennials with information quickly, resulting in instant validation and feedback from their online community. It also gives them a platform to display their evaluation of services rendered. The mortgage advisor needs to actively engage and educate the new homebuyer on how sales and costs are established and what is competitive to the market. It also seems that text vs email is a preferred communication style. Do not act so much as an authority figure, but as a mentor. Be sure to ask what their expectation for your services are from their perspective.

The real estate and mortgage industries are changing fast to create a model for the new homebuyer. In the transition, an overload of information will cause confusion. The most successful mortgage originator will adjust their process to have a more thoughtful and consultative approach to this new homebuyer. We are poised to enjoy or forge this wave of new first time homebuyers, but insight into their psychology and generational personality will be important to win with the next generation.