January 2016 - Out of the Woods

TheMReport — News and strategies for the evolving mortgage marketplace.

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20 | TH E M R EP O RT FEATURE So they've certainly got the headcount to drive markets. But their timing may run a little differ- ently than that of their forebears. The parents of boomers created the housing explosions of the 50s and 60s, moving families out of the cities and into the suburbs. When it came time for boomers to enter the housing market, most bought homes in their late 20s and early 30s. But for millennials, things are much, much different. Why so different? Millennials' paradigms for life are fundamen - tally dissimilar from previous generations. Everything is happen- ing later, from college education to family creation. Some observers feel the reasons for this are based in deep-seated attitudes of self- centricity and entitlement among millennials. While this impression is not without reason, it is overly simplistic. Millennials are demon - strably more idealistic and desire more out of life than what many of them regard as the materialistic pursuits of previous generations. A study by the Council of Economic Advisors recently found that millennials were more interested than their parents and older siblings in contributing to society, being closer to friends and family, making certain their children are better off, finding new ways to experience things, and smelling the roses instead of being all-consumed by work. This sounds more like idealism than narcissism, and much of it was created by the changing world around them. Millennials were raised during the worst economic downturn since the 1930s, one that swept the globe with unemployment, foreclosures, rising prices, and political instability. College educa - tions are more expensive than ever, and students are graduating with the highest educational debt in history—currently about $1.1 trillion and rising—and find- ing fewer well-paying jobs to make it all seem worthwhile. Homeownership scenarios that for prior generations were five to seven years after college gradu- ation have become 10- to 15-year post-graduation timelines for mil- lennials. Rental real estate changed in many areas from being cheaper than purchased housing to being more expensive due to greater demand. We're waiting longer for this entire generation to be able to qualify for mortgages, and student debts are a big impediment to meeting DTI requirements. That's a simple reality—but the opportu - nity is still vibrant. Instead of heaping criticism upon millennials, as so many seem eager to do, consider a more informed approach. Here are four major things to keep in mind: Your Future May Depend on Them W hile millennials are start- ing later, they are arriving in greater numbers. More than 10,000 of them are turning 30 every day and will continue to do so for the next two decades. Some estimates say they will spend up to $2 trillion on home purchases over the next five years. That's an opportunity you want to be listening for when it knocks. The millennials are a far more diverse group, too. More than 44 percent of them are part of a minority race or ethnic group, and this number spikes depend - ing on locale. But the driving, unifying fac- tor behind the entire generation is technology. They are the first generation to grow up entirely in the computer and Internet age. They are digital all the way down to the shoes they bought online, with connectivity as basic a necessity as breathing. If you don't have the connectivity they require, you're not going to do a lot of business with them. Connectivity Is Life U p to 94 percent of millenni- als begin their home search online, studies say, and most of them prefer to communicate not in person, but through technol- ogy. Accenture Consulting put it this way in a recent report: "Millennials stand apart from previous generations due to their immersion in technology. It is a logical extension that they will also conduct their mortgage shopping online. This affords mortgage lenders an opportunity to educate, engage and encour - age Millennials, guiding them through the mortgage process." This is great advice, and it offers an important theme to dealing successfully with this essential market segment: Technology is everything, and connectivity is life. A revealing stat: 87 percent of millennials surveyed agreed with the statement, "My smartphone never leaves my side, night or day." Lenders who can offer the best experiences will derive the greatest benefit, and those experiences are a combination of technology tools and human expertise, delivered in the way the audience desires. Making Up to 94 percent of millennials begin their home search online, studies say, and most of them prefer to communicate not in person, but through technology.

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