Attracting a New Generation: Millennials
As the focus shifts, we all turn to watch the millennials and how they affect and engage with the housing market. It is important to understand how different this generation is from previous generations in order to adjust the traditional way of marketing and selling a mortgage loan. The focus should be on learning how to appropriately appeal to this new target audience and implementing practices that keep you in the game.
Millennials are changing the way things are done, altering perceptions on how buying a home has been traditionally handled, and shaking up the market and economy as a whole. With this shuffling comes disorientation on how to adapt while simultaneously maintaining credibility and reinforcing your brand. In order to be successful in today’s market, lenders must make a significant change to their business practices and strategies to properly attract and serve millennials.
There are multiple factors contributing to the stall of millennials entering the housing market. Their lower net worth, personally experiencing repercussions of the housing market crash, and dedication to individualism all play crucial roles in how they interact with lenders before taking the plunge and purchasing a home. Recognizing how these factors come into play and adjusting your business model accordingly is the key to your success.
Millennials’ average net worth is significantly less than previous generations meaning they have less to spend in a market that already has them weary of its stability. The reason for this lower net worth is because of the fact that jobs were taken at lower pay simply because so few opportunities were available as they entered the workforce. While earning less, interest on student loans remained high therefore leaving the idea of savings accounts a goal to reach at a later date. While the economy and housing market may be recovering now, not all millennials’ bank accounts have had the opportunity to catch up yet. This lower net worth is resulting in the inability to afford down payments and mortgage insurance on homes. While the mortgage industry is developing loans that accommodate these financial needs to attract millennials into becoming first time homebuyers, the marketing of mortgages and educating this audience needs to also become more accommodating.
Many millennials were graduating college and entering the work force as the housing market and economy sped uncontrollably downhill. College graduates in the classes of 2008 and 2009 were hit the hardest and entered one of the worst job markets in American history. After witnessing firsthand the catastrophic implosion of our economic system, few millennials have the confidence or desire to put their focus on becoming homeowners and are turning their efforts to growing their careers. To say millennials are weary of the economy is an understatement. For those who can afford homes, many are putting this financial investment first before getting married and starting families thereby also shifting the dynamic of traditional homebuyers. Today, many homebuyers are unmarried couples looking to escape the competitive and expensive renting cycle. The traditional steps taken in life have been overturned by this generation. Getting married, buying a home, and starting a family is no longer the only travelled route in life. The concept of what constitutes a family is being debated. What people deem as important is shifting. And new lifestyles are being created and followed with more zest. So it is understandable that the traditional sales pitch and the mentality that certain goals must be reached by a certain point in life are no longer valid.
As a generation that has constant access to everyone and everything in their lives, creating a steady flow of communication is important to them, especially as they make one of the biggest financial decisions of their lives. While a traditional sales pitch might get them thinking, this will not be the deciding factor in buying a home. Lenders need to be a source of information. Being able to recognize the difference between how homebuying is handled now versus previous generations can make or break your business. Do not get stuck marketing your business in a dated style. Millennials turn to trusted connections in their lives to provide quality referrals and advice. The use of apps also plays a major role too. Today, there is an app for virtually every task in life. Know where millennials go to find information and be present in that space. Establishing yourself as a trusted source of information with the ability to provide the tools they need to succeed will be much more effective.
Millennials seek advice on how to be financially savvy but at the same time are dedicated to maintaining their independence. They will go to more sources and do more research than previous generations just to ensure they are making the best, most educated decision possible. They rely heavily on social connections to help them evaluate possibilities and outcomes. As a whole, this group has a strong desire to succeed. With 63% of millennials having earned a bachelor’s degree, this group of homebuyers is the most educated group in America’s history. From startups to world-saving ideas, millennials are focused on the big picture and making a difference. With that said, they take each major life-decision very seriously. And since buying a home is a major financial investment, the process will be heavily researched and discussed before taking the plunge. Know that you will not be the only source they turn to for assistance. Instead, focus on being the best and providing them the service they want, not what you think they want.
Millennials have grown up with instantaneous connection to the world, top-notch technology, fast-paced lifestyles, and the idea that they can achieve anything they put their minds to. When entering the housing market, these ideas and ways of life will not be pushed to the wayside. Instead, lenders and mortgage professionals need to embrace this mentality and lifestyle to better serve this generation.
With these factors in mind, it makes sense that traditional ways of reaching out to potential buyers is relatively ineffective. While we look at millennials to see their behaviors, we should also be anticipating the best way to readjust and connect with them in a way they find to be resourceful and that meshes with their needs. Offer resources they can use. Be able to point to apps, articles, and business partners to help them through the process. Be available in the space they are most comfortable. Do they prefer to be texted rather than called? Make the adjustment to be the lender they need. Home ownership is still a desirable goal for most but they may not realize just how attainable it is. Combine your knowledge of the industry with your knowledge of the millennial generation. In doing so, you will be able to successfully attract a new generation to homebuying. Be relatable as well as understanding of their concerns and hesitations. What may have worked for you buying your first home is most likely no longer relevant. The times have changed drastically just in the last decade. Has your business strategy kept up?
By Ashley Lubey
As seen in National Mortgage Professional Magazine