By Jim Jumpe, Senior Vice President and Chief Marketing Officer, Arch MI
Millennials are serious about buying their first home and this creates opportunities for loan originators focused on the large number of college-educated, high-income young people who are ready to become first-time homebuyers.
Millennials in Focus
According to the 2021 Home Buyers and Sellers Generational Trends Report, published in March by the National Association of Realtors® (NAR), Millennials (ages 22–40) view buying a home as a good investment — more than any other generation — and they represent the largest segment of homebuyers overall (37% in 2020).
The NAR survey segments the generation into younger (ages 22–30) and older (ages 31–40) sets because they present different profiles:
- Older Millennial homebuyers boast the second-highest household incomes of any age segment at $105,600. For those in the 22–30 age group, the median household income is $80,000.
- Millennial homebuyers are more highly educated than any other age segment, with 79% of older Millennials holding a bachelor’s degree or higher. Younger Millennials are close behind, with 77% earning at least a four-year college degree (and some still working on degrees).
- Younger Millennials are most likely to move directly from a family member’s home into a home they purchased (28%). Nearly a quarter (23%) of the younger group also used gift funds from relatives as all or part of their down payment.
Challenges:
- Many Millennials, especially the younger set in their 20s, are saddled with student debt and high rents.
- Of all generations, Millennials say they are making the most sacrifices to save for a home, including cutting their spending on entertainment and luxury items.
- The NAR report shows that beyond the challenge of finding the right property in the first place, Millennials are more intimidated than any other generation by the challenges of buying a house:
- Completing the paperwork.
- Understanding the process and steps.
- Saving for the down payment.
- Closing on a mortgage.
- Getting an appraisal.
Source: NAR 2021 Home Buyers and Sellers Generational Report
How to Reach Out to Millennial Homebuyers in 2021
Must-haves: Arch MI’s comprehensive “Roadmap to Homeownership” materials are available to help you educate prospective first-time homebuyers on the various strategies to speed their homeownership journey. Remember, Millennials love the internet, so use your social media network to engage them and introduce yourself. Then invite them for a virtual or in-person “Roadmap to Homeownership” presentation that includes the step-by-step checklists they need. Bolster their confidence in managing the paperwork and process.
This article originally appeared in Arch MI’s Insights blog, which presents expert commentary on challenges and opportunities for mortgage loan originators. Bookmark insights.archmi.com for all of our posts on mortgage-related topics.