February 2017 - Making Millennials Move

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14 | TH E M R EP O RT COVER STORY generations, and 52 percent of buy- ers said they've considered renting for extended periods in order to save for a down payment and put it toward a house they like, ac - cording to the report. Generation Gap M ost millennials do want to own homes eventually, but some find the idea impractical or daunting given their current financ - es. They're frustrated by comparing their parents' prospects as young adults, decades ago, with their own meager ones in the present. MaKenna Woods, a 24-year-old graduate assistant who is pursuing a doctoral degree in social work, often finds herself comparing her financial situation to that of her parents. She is acutely aware of the pressure to exceed her parents' achievements. "I am constantly comparing myself to my mother and where she was at my age," Woods said. "At 24, she was already married with a child and one on the way. She and my dad owned a home and were making their way in life. Fast forward to my 24-year- old self, I'm still in graduate school renting a townhouse with a friend of mine. The idea of owning a home seems like a pipe dream—a goal that I will only be able to reach when I'm not inundated with student loans that are accruing interest." The prevalence of student loans causes a chilling effect on millen - nials' homeownership ambitions. With a national student loan debt of more than $1.3 trillion, many mil- lennials are bogged down by pay- ments, with their high interest rates and long-term repayment periods. Not every millennial is affected, but many members of this genera - tion do harbor student debt or live in a home with family mem- bers who have accrued student debt. Harvard OIP revealed that more than 42 percent of millenni- als between the ages of 18 and 29 are currently living with student debt or know someone in their household who has student debt, while 48 percent of millennials say they do not have any student loan debt. Additionally, 57 percent of millennials in that age range believe that student debt is a major problem for young people in the United States. Ryan Williams, a 25-year- old business professional living in Dallas, shared the same sentiments as MaKenna Woods, saying that the market is in a different place than it was for previous generations. "My parents were both 22 years old when they purchased their three-bedroom home in Garland, Texas," Williams said. "Parents believe that kids should have an easier time purchasing a home because of all of the resources and opportunities available to us, but that's not the case. They fail to fac- tor in inflation and the big housing crisis, which make it harder for those in my age group to attain these goals. Millennials are barely making it due to other financial obligations, so purchasing a home gets put on the back burner." A Different American Dream T here also seems to be a mismatch between where the jobs are and where real estate is affordable. Simultane- ously, though most renters still want to become homeowner, the implicit social value of being a homeowner may not be as strong as it once was. Erin Smith, a 33-year-old business professional living in Los Angeles, sees herself mov- ing back to her hometown of Louisville, Kentucky to purchase a home. Los Angeles homes, which include celebrity-populated suburbs like Beverly Hills and Malibu, hold the title as America's most valuable housing market and have a combined total value of more than $2.5 trillion—more than double the combined wealth of America's 50 richest citizens, according to the latest Real Estate Analytics report by Zillow. Smith is currently living in a rental property but is unsure if she wants to purchase a home. "I'm not sure I want to own a house," Smith said. "The reality is that I may not marry or have children, and the upkeep of a home can be time consuming and expensive. Right now, I don't see myself owning a home in L.A. My entire family is back in Kentucky. My roots are there, and that's where I also see my forever home being." The financial industry's unap - proachability—and dubious repu- tation—doesn't help matters. For example, Smith thinks that mortgage lenders can do more to improve their efforts in targeting millennials. She noted that many in her generation feel skeptical of homeownership because of the housing crisis. "I actually don't think I'm be- ing targeted at all by mortgage lenders," Smith said. "I, person- ally, am skeptical of the whole system because of the crisis back in 2007-2008. I remember working for a mortgage lender and learning about all the subprime loans and thought to myself, 'Sooner or later this is going to get ugly,' and it did. Because of that, people—especially millennials—are cautious about en- tering into a mortgage agreement." Making the Connection D espite millennials' sentiments toward homeownership, this generation is the future of the housing market. It is imperative that they are given the necessary tools and resources in order to succeed—otherwise many of us are out of a job. How can lenders entice millen- nials? This is the question: In a mar- ket that's itching to attract the next generation of homeowners, what can lenders do to draw millennials to homeownership? How can they be convinced to take that next step toward purchasing? Joining the 21st century posthaste will help. Lenders and servicers are developing programs in the digital space to meet the needs of the average American homeowner, and as the industry becomes more inclusive, millenni- als are becoming part of the con- versation and a consideration in organizations' bottom lines. The importance of this demographic helps drive the development of web-based and mobile amenities. Nationstar Mortgage, a non- bank servicer located in Dallas, is focusing on "keeping the dream of homeownership alive." In an effort to fulfill the company's purpose, Nationstar has reinvented its website in order to broaden its reach and cater to millennials. The website has a feature called Street Smarts, which allows customers to become more in tune with their fi- nances. Customers can understand their FICO score, determine the amount of equity in their home, "The idea of owning a home seems like a pipe dream—a goal that I will only be able to reach when I'm not inundated with student loans that are accruing interest." —MaKenna Woods, graduate assistant (24-year-old )

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