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Millennials, the Internet and Originations … A Closer Look

Sep 21, 2013

When it comes to homeownership and the demographic sector known as “Millennials” (those born between 1977 and 1995), there is good news, bad news and interesting news. First, let’s get the bad news out of the way: Recent U.S. Census Bureau data has determined that Millennials experienced the largest drop in homeownership rate between 2006 and 2011. In the course of this five-year stretch, Millennial homeownership rates fell seven percent–compared to a 6.3 percent drop from those between 35 and 44 years of age and a 3.8 percent tumble for those between 48 and 54. Now … the good news. In July, the National Association of Realtors (NAR) Home Buyer and Seller Generational Trends Survey found that eight out of 10 recent homebuyers considered their residential purchase to be a good financial investment. And among buyers under the age of 32, the number was 85 percent. This would suggest that, despite the tumult of recent years, Millennials have not soured on the concept of homeownership. But, now we have the interesting news: The NAR survey also found that Millennials are leading the charge away to Internet usage for home searching. Indeed, the survey found that the frequency of Internet usage for home searches decreased as the age of potential homeowners increased. Ninety percent of Millennials were found to frequently use the Internet to search for homes, while less than half of the so-called Silent Generation (those born between 1925 and 1944) relied on Mozilla or Internet Explorer for their home searches. Furthermore, the younger generations of homebuyers stated they were more likely to find the home they purchased via the Internet, while older buyers primarily learned about the home they acquired from a real estate agent. This development is interesting because it affirms an evolving shift in the dynamics of the origination process. Thus, a new question needs to be asked: Does the younger Internet savvy home purchaser spell opportunity for the mortgage loan originator? The answer, it seems, is a qualified yes–which can be translated into an unmistakable affirmation if originators pay careful attention to this demographic. Although the NAR survey seemed to accentuate the positives in terms of how Millennials considered homeownership, originators need to recall that this demographic came away from the housing crash with the greatest degree of pain. Factor in difficult economic aspects, such as stagnant wages, a somewhat moribund employment environment and a large number of Millennials burdened by debt from their college loans–and originators face potential younger homebuyers who are still on unsteady financial ground. Therefore, it may be a good idea for originators to offer very careful financial planning and a somewhat higher level of emotional support for this demographic. This will be a challenge, as the new regulatory burden does not allow the easy flexibility afforded to homebuyers as recently as five years ago–even a 20 percent downpayment may be beyond the reach of many Millennials today. But while it is a difficult situation, it is not an impossible endeavor. As for the Internet, originators will need to ratchet up their online marketing game in order to get face time with this demographic. The mortgage banker who cannot tell a QRM from a QR Code runs the risk of losing significant business. Now, more than ever, originators need to display detailed expertise in Search Engine Optimization (SEO), social media marketing and online engagement skills aimed at the next generation of homebuyers. Quite frankly, most Millennials will not be strolling into the neighborhood mortgage brokerage–and originators that cannot raise their online visibility with this audience will see their market share begin to evaporate. Phil Hall is senior editor of National Mortgage Professional Magazine. He may be reached by e-mail at [email protected]  
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