Millennials want to buy but they can’t

MILLENNIALS WANT TO BUY BUT THEY CAN’T TRUST LENDERS OR THE HOUSING MARKET

It is safe to say that the housing market in the United States is at a crossroads. Giants in the housing industry report up and downswings in the parameters of the home prices, starts, and sales. Even though data seem to paint both an unflattering and flattering general picture in all the same month, one thing is clear, millennials are not buying homes in the number the previous generations did.

One of the most defining characteristics of the millennials generation’s experience with the financial and housing ecosystem is that of fear. Which has ultimately led them to develop a pervasive mistrust of banks, lenders and the housing market overall. This generation may be the first one to say “meh” to the homeownership aspect of the American dream. This can be well reflected in the percentage of sales to the first-time homebuyers which dropped below 30 percent compared to the averaging 40 percent. But, that shouldn’t be taken to mean that millennials are not interested in buying homes, the desire is there. In fact, according to a survey done by the National Association of Realtors (NAR), 74 percent of the millennials think they’ll own home before turning 35.

One of the major reasons why millennials are opting out of the housing industry is the mistrust in the financial institutions based on what they have consistently witnessed during the housing crisis and the fear of not qualifying for a mortgage because of the student loan debt and a struggling job market. When you put all these factors together, it makes it easier for millennials to feel comfortable living with their parents. To put this into perspective, Even Financial conducted a study, where it found that 92% of millennials stated that banks could not be trusted, over half said that they didn’t know anyone they could turn to for financial advice.

In another survey by Bankrate, nearly half (45 percent of millennials aged 23-38) identified the skyrocketing prices of homes and the high cost of living as one of the major factors and barriers to buying a home compared with other generations. About

38 percent of Gen Xers (aged 39-54) and 31 percent of baby boomers (aged 55 to 73) cited the high cost of living as a major barrier to homeownership.

Low Engagement with Financial Institutions

Millennials do not engage financial institutions as often as they should. The underlying issue here is the fact that millennials’ knowledge about the minimum requirements, especially during a time when the country’s notable lack of affordable housing, is a pressing issue. Millennials who want to own a home are often hampered by income that is not much, coupled with the high cost of living.

Over the recent past, we’ve seen the mortgage industry trying so hard to engage millennials (a rapidly growing population segment) and for a good reason. In 2020, one out of three American adults will be a millennial, which could translate into 75 percent of the total workforce in the united states 5 years from now. Therefore, it is important to start an awareness campaign as early as today. Unlike other generations, millennials grew up in a connected world, they

embrace technology, which means, mortgage lenders have a very unique opportunity to engage with them.

Millennials like previously said do not trust financial institutions, which means, mortgage lenders have to drop down the complacency in their approach. Much of this mistrust stems from the growing cases of reports of unduly dealings of financial institutions and the financial crisis, which has left them with the impression that banks get bailed-out, mortgage lenders helped to crash the economy through the bad home-buying policies and that the long-term employment is not a reality going forward.

Millennials Turning to Assistance Programs, Retirement Savings for Down Payments

Financially, young buyers may feel the deck is stacked against them. This means they are likely to use multiple avenues to fund the downpayment and the closing costs for their first home.

downpayment and closing costs than other generations, 33 percent of the millennials say that they used a downpayment assistance program or grant compared with 27 percent of the Gen Xers.

On a more worrisome note, the findings by Bankrate show that millennials are twice as likely to dip into their retirement savings than any other generations in a bid to finance enough money for their housing costs, which could be trouble later on in their lives. But this is a problem cutting across all the generations, Americans are not saving enough for their retirement, which means, most of them are tapping a 401 (k) account for their house purchase which can hurt them later on in life.

The barriers to homeownership can be easily solved with the right guidance and education and a good start would be to talk to agents who are HUD-approved such as the VIP Agents that we have stationed all across the state of California, they will give you advice and specific guidance for your situation. Most millennials cite income as a major factor that prevents them from pursuing their homeownership journey, but our VIP agents will introduce you to a No Money Down program that will help you kickstart your journey today.

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Resources: https://thepowerisnow.com/vipagentsservices/ https://www.nationalmortgagenews.com/opinion/sellingmortgages-to-millennials https://thepowerisnow.com/

Sources and Works Cited https://www.bankrate.com/surveys/down-paymentsurvey-september-2019/ https://www.stemlending.com/millennials-technologymortgage-shopping/ https://www.housingwire.com/articles/millennials-donttrust-lenders-or-the-housing-market-so-how-do-wereach-them/ https://pemco-limited.com/gaining-millennial-trust