Some real estate agents may shy away from Millennial home buyers. After all, Millennials are the youngest buyers on the market; they lack experience and often have a lower price point.
In reality, though, you should jump at the opportunity to work with Millennials. Because the majority are first-time home buyers, they not only need a trusted adviser to show them the ropes now, but you want to position yourself as the real estate agent they turn to when it comes time to purchase their second home. Why not get ahead start on developing that relationship?
To understand this buyer niche better, here are four things to know:
1. Who They Are
Millennials were born between the early 1980s and 2000s, meaning they are currently 35 years old and younger. HouseHunt Network reports the following regarding real estate trends for these buyers:
- Millennials made up 31 percent of all home buyers in 2014.
- Ninety-seven percent of Millennials financed their homes.
- Twenty-four percent were already repeat home buyers.
- Eight out of 10 purchased a home because they thought it would be a good investment.
- Nineteen percent purchased a home in a major city.
- Six percent purchased a multigenerational home.
These statistics help show how many Millennials are in the market and what they're looking for, offering a glimpse into their motivations for buying a home.
2. How They Think
Most Millennials grew up with the Internet. They have a DIY mentality and do research online before even picking up the phone to reach out to a real estate agent. Because of this, many of them overlook the value an agent adds to a transaction. It's important to help your Millennial clients understand that your knowledge and firsthand experience are more valuable than the tips they can glean from the web.
3. What They're Struggling With
One of the best ways to connect with Millennial home buyers is to understand what obstacles lie between them and the home of their dreams. And the biggest issue for most? Money. (Surprise, surprise.)
Considering Millennials entered the job market during the Great Recession, many have faced low wage growth and rising rents. Add their mounting student loan debt—just under $30,000 per student on average, according to U.S. News & World Report—and it's understandable why the customary 20 percent down payment is a major barrier to home ownership.
In fact, according to Yahoo Finance, a typical Millennial needs 12.5 years to save up for a down payment. What's more, tough lending regulations can make it difficult for Millennials to qualify for a mortgage.
4. Their Options
There are many programs and housing initiatives that Millennial home buyers can take advantage of. Just this past January, as Yahoo reported, Fannie Mae and Freddie Mac dropped the minimum down payment from 5 percent to 3 percent on some of its mortgages. Meanwhile, the U.S. government cut the premium for mortgage insurance that FHA loan borrowers must pay from 1.35 percent to .85 percent, saving borrowers about $1,000 a year. There are also regional programs, such as Colorado's CHFA grant program, that allow prospective buyers to purchase a home for as little as $1,000 down. Know which programs exist in your area and nationwide so you can give your Millennial home buyers as many options and as much support as possible.
It's important to connect with Millennial home buyers—they're the largest generation in the nation, as reported by the Council of Economic Advisers. They're also the largest demographic group to ever enter the housing market, making up 17 percent of US households, according to MarketWatch. The more you know, the more likely you are to prove yourself to be the best real estate agent for them—and to help your business grow in the process.