It’s Interesting What They Are Looking Into…
Millennials are really making big waves in the Real Estate Empire. They are buying homes in areas that are shocking Loan Officers and Real Estate Agents across the board. When we think of millennials, we think of people born in the year 2000 and after but this new generation is characterized as anyone born after 1984 – they are considered the “Next Generation” or as some may call them, “Generation Y.”
These thirty-something year olds are looking to purchase their new home but what type of homes they are looking for is the interesting part. There is a lot of contradicting stories on the web about millennials not wanting to buy homes and then there are others that say they are eager to spend.
So What Are These Millennials Really Up To & How Can We Use Them As A Reference Point?
One of the great debates in the mortgage industry today is whether the Great Recession has diminished the desire to own a home among younger households.
Those who support the premise of waning desire will point to the declining homeownership rate, especially among those 35 and younger, as evidence. Others point to affordability issues of rising rates and home values combined with low wage growth and student debt load as a cause for a shift away from homeownership.
On the opposite side of the argument are those who point to the restricted supply of housing due to approximately 9 million underwater properties as a factor in low home sales. Others say it’s a function of the increasing average age at which people get married that’s driving the delayed home-buying process for Millennials. Yet others blame restrictive lending standards for leaving many younger, lower-wealth borrowers on the outside looking in. For example, despite the fact that since 2009, MGIC has insured loans with credit scores as low as 620, our insured loans’ FICO score average is north of 740. In contrast, in the late 1990s and early 2000s (pre-bubble era loans), the business our customers sent us had an average credit score closer to 700.
Past articles on this blog have talked about how loan officers can use social media to develop more leads. But until you jump into the pool and pursue these Gen Y leads, you won’t be able to use those strategies.
In our view, given the sheer size of the Millennial generation, it is a matter of when, not if, they buy homes. According to the Census Bureau, the current homeownership rate for households 34 and younger is approximately 35%; the average ownership rate is 58% for ages 35-44. If those ratios hold, that means that nearly 17 million Millennials will buy a home in the next 8 years.
This fact, supported by a recent MBA study, seems to stress the importance of patience with regard to the anticipated surge of new homeownership from the Millennial demographic.
However, The Question Remains… Would You Be Able To Get Their Business?
Would You Ever Have A Millennial With A Low Credit Score Get A Loan? If So Tell Us About It!
Article Source: Loan Officer Hub