After all that griping about how Millennials are ruining the housing market, it turns out they’re barely involved at all.
“There’s a big focus on Millennials but in reality, the majority of borrowers are still over 36 years old,” Fred Kreger, president of the National Association of Mortgage Professionals, said a statement accompanying NAMB’s latest member survey. “For small mortgage businesses strategizing on getting a bigger piece of the pie in a shrinking market, it’s important to consider that most of today’s business comes not from Millennials, but from non-Millennial borrowers.”
NAMB’s July survey of members NAMB’s July survey of members found that Millennial borrowers account for 25 percent or less of the customer bases for over half of survey respondents. Instead, Gen X dominates the market: Nearly half of respondents report that Generation X borrowers account for 36 percent to 75 percent of their customer bases. More than one quarter report that Gen Xers comprise 50 percent to 75 percent of their customer bases.
To be sure, these results are nationwide and the economics of the country vary widely. The reasons why Millennials aren’t entering the market also vary, and have been discussed ad nauseam. Here in Massachusetts, the high barriers to entry certainly contribute to the generation’s disinclination to purchase property.
Another factor keeping Millennials out of the market? They don’t think they qualify for a mortgage, or they think they must have a 20 percent down payment, or they’re frankly terrified of such a large and important purchase.
The mortgage and housing industry has struggled mightily to reach these potential buyers to let them know that they probably do qualify; they don’t need 20 percent down; and while buying a house or condominium may be a scary thought, it doesn’t have to be a scary experience.
Perhaps it’s time to leave the Millennials alone. They’re small fish in a big pond; generally today’s 30- and 20-somethings aren’t exactly flush with disposable income (or even savings accounts). But if you’re determined to reach them, here’s some free advice: advertise on all the home-shopping shows on TV. There’s a lot of dreamers out there who don’t realize that an entry-level version of the dream is possible – and if you do it right, you too can eventually buy a flat in Paris.
Gen Xers, on the other hand, are well settled into their careers, families and communities. They are generally more financially stable than the Millennials. They’re taking care of elderly parents and looking for homes that can accommodate the whole family. They’re sending kids to college and looking to downsize. The generation is on the cusp of middle age, which – not unlike the adolescence of many of their children – can be a time of great upheaval and life changes.
And many of them have a ton of equity in their current homes. Unfortunately, given the state’s inventory crunch, they’re also not ready to sell, lest they fail to find a place to buy. This sellers’ market can’t last forever, and when it cools, look to the Gen Xers for your next client.
