Millennial Home Buying – Bucking the Trends
Stereotypes have targeted all generations in recent American history, and the Millennial generation is no exception. Millennials, defined as people born after 1980, are frequently thought of as a coddled, soft generation of lazy people who lack a strong work ethic. There have even been accusations that Millennials hold back the economy because they have stopped spending money on going out and on making large purchases, such as a house. Millennials are frequently thought to not appreciate what previous generations have done for them. This is the attitude that most generations have toward the next. The historical tendency has been for one generation to look upon the next in an unflattering light. Millennials are thought of as dreaming of going far in life while simultaneously checking social media and not actually doing anything to achieve their dreams. On top of being outright prejudicial and negative, these ideas ignore the system into which Millennials were born. The Millennial generation has not collectively decided to hold back the economy and refrain from purchasing homes. The ever-growing national problem of large amounts of student loan debt and the rising price of houses in the real estate market have made it increasingly difficult for young generations to make such a substantial purchase. We, at Fairway’s First Team, are here to help Millennials realize that the process of home buying is possible for them, and we are here to help and guide Millennials to get them on their way to their first home purchase.
Millennials and the American Dream
The American Dream seems to be an idea that many Millennials feel is denied to them. The housing market crash at the beginning of the 21st century has left the impression that the economy and the housing market are not as stable as one would like to believe. Millennials widely perceive homeownership to be a privilege entitled to the past generations. Additionally, Millennials face more potential obstacles to homeownership than other generational groups, including Baby Boomers, Gen X and Gen Y-ers. Significant educational debt and increased housing rates have made planning for a down payment more difficult for Millennials. Tight financial restrictions have made it difficult to get mortgage loans. Furthermore, reducing the availability of subsidized housing has posed problems.
Hope for Homeownership
The good news is the recently developing trend in Millennial homeownership is improving now. Figure 1 above shows how homeownership peaked in 2005, right before the housing market crashed. This was due to the financial bubble that unregulated mortgages had produced during this period. Immediately after, there was an unwavering trend of reduced homeownership for about a decade. However, immediately after 2015, an upward trend began to be observed. According to the cohort theory, it can be inferred that this trend will continue to improve until the shift towards the initial decline for the following cohort begins. Further investigation into the drivers behind this wave of change would prove invaluable to the real estate community by allowing the industry to predict when the housing market will flourish and when it will crash.
Some initiatives will improve homeownership exposure for Millennials and cross the divide in homeownership between various racial and ethnic groups. For example, financial technologies continue to streamline and increase the productivity of the mortgage process. Mortgage brokers can use rental and service payment history data to accurately determine Millennials’ creditworthiness and collect revenue in the underwriting phase.
Getting the Word Out
For future generations, financial preparation as part of a high school or college program is a long-term approach. Still, there is an urgent need to offer Millennials knowledge and raise understanding about their opportunity to buy a home. Reputable mortgage brokers, such as Fairway’s First Team, can provide guidance through the process and a once-in-a-lifetime opportunity for Millennial buyers to achieve their dreams of homeownership.