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How Millennial Homebuyers Are Changing the Industry

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Real estate agents and mortgage lenders have spent years eagerly awaiting the entrance of Millennials into the housing market. Unfortunately, that hasn’t happened as quickly as some in the industry might have wished. While this group is now the largest cohort of home shoppers, they still have some challenges and shop for homes and mortgages differently than their predecessors.

The Power of Millennial Homebuyers

Realtor.com reported that Millennials finally surpassed Gen X as the group responsible for the most mortgage originations in January 2017. By the end of 2018, Millennials accounted for 45% of all new mortgages compared to 36% for Gen X and 17% for Baby Boomers.

The National Association of Realtors reported that Millennials accounted for 37% of homebuyers in 2018, making them the largest cohort of buyers. More Millennials than ever are making the move towards homeownership, but what took them so long? And, of the ones still sitting on the sidelines, what’s holding them back?

Obstacles Millennials Face When Purchasing a Home

According to a recent study by Chase Home Lending, 52% of millennial home-buyers feel financially ready to buy a home. That means that nearly half of this group is still facing obstacles. The Urban Institute issued a report finding that the rate of homeownership in this group is much lower than that of prior generations.

Unfortunately, Millennials are facing a host of hurdles when it comes to affordability. Zillow reports that starter home prices have skyrocketed more than 57% over the past five years. At the same time, inventory levels have plummeted more than 23%.

And Millennials just don’t have the same resources to devote to homeownership that their parents and grandparents did. Many are saddled with crippling student debt, and increasing numbers are delaying marriage and opting to rent longer.

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How Millennial Homebuyers Are Different

Even though some Millennials are content to be renters, an increasing number have a strong desire to purchase a home. Previous generations found real estate agents and mortgage lenders through personal referrals. This isn’t the way of the Millennial in an age where technology rules.

This group, primarily in their 20s and 30s, is accustomed to using technology to meet needs ranging from getting a pizza to finding a place to live. In fact, the NAR reports that 81% of older Millennials located their homes through a mobile app. Knowing this, those seeking to reach this group will surely learn to leverage technology to the fullest.

Even Amazon has dipped its toe into the real estate market with its TurnKey Home Purchase Service, in partnership with Century 21 and Coldwell Banker. Home shoppers can answer a few questions online to get matched with providers in the industry that can help them achieve their goal of homeownership.

Despite the increased participation, some Millennials admit to having regrets. In one Zillow survey, 81% of young homeowners had at least one regret about their purchase compared to 65% with older homeowners. In many cases, those regrets centered not around the property or their decision to buy a home, but around the type of mortgage they chose or their mortgage payments.