80 million millennials

When it comes to what’s out there, we should learn more

80 million. That’s how many millennials are out there, according to Mark Zandi, the chief economist of Moody’s Analytics.

Mark was speaking on my panel during the Bipartisan Policy Center 2014 Housing Summit in Washington, D.C. Mark also mentioned that there were 80 million baby boomers, too.

The panel was titled: Demographic realignment: Can Millennials save the housing market?

Given the expansive media coverage of millennials as one group of like-minded individuals, I went into the panel believing the answer would be a resounding “no.”

As Raphael Bostic of USC’s Sol Price School of Public Policy said during a luncheon panel with HousingWire CEO Paul Jackson, “ownership doesn’t buy [millennials] very much right now. They want to innovate and create right now. My guess is when they start pairing up, they’re going to want a house all of their own.”

Yes, I went into the panel thinking that millennials were of little to no help to housing. And I walked out humbled and frankly feeling my approach to the entire issue was a little dumb.  The mere effort of defining a millennial is futile, I now know; their diversity, approach, culture and the lack of access to affordable credit are all issues impacting each and every one in different ways.

After listening to my panelists lay out the generational nuances of millennials, I can now say that even mortgage finance experts should do more to research the topic. No, not should, but rather need to.

“We need to make an adjustment to the way we view millennials,” Zandi said on my panel. Sara Stevens, the daughter of the president of the Mortgage Bankers Association, is not interested in buying in D.C., unless there were more mortgage products to choose from, some not even in existence (mobile mortgage, for example). Kristin Messerli, with Cultural Outreach, is a millennial homeowner in Tulsa and believes her husband’s medical bills should not factor in to getting a mortgage (they didn’t, but in many other cases, they do).

Mitria Wilson, from NCRC, said an FHA-backed 30-year mortgage is a great way to sell into communities of color, as long as they are counseled into the benefit of refinancing a few years down the line into a cheaper product.

This was only the tip of the iceberg from the in-depth knowledge my panel of experts delivered that morning at the Renaissance Hotel.

80 million. That’s a whole lot of money mortgage lenders are currently leaving on the table. The credit box is widening? Nonsense.

“The millennial generation is the key to a sustained real estate recovery and boomers who are downsizing are helping open the door for many first-time homebuyers while also driving demand for purchases and rentals in the markets where they are moving,” said Daren Blomquist, vice president of RealtyTrac, in a report last month. “Naturally, millennials are attracted to markets with good job prospects and low unemployment, but that tend to have high rental rates and high home price appreciation, while boomers are moving to lower populated areas which have slower home price appreciation.”

Lenders aren’t lending because they don’t understand millennials. They don’t get their needs, their wants. They’re not smart enough to get one step ahead of millennials in order to convince them to stop paying rents and start looking at homes.

Consider that web traffic to the likes of Trulia and Zillow keep rising. Now consider how few of those surfers, clearly interested in property, actually convert into a mortgage application. Whose fault is that for not getting the hook in the potential client?

It boggles the mind how this industry is blind to so much missed opportunity.

According to a recent Reserve Bank of New York blog post on its online platform, Liberty Street Economics, about 60% of survey respondents think that buying property in their zip code is a good investment, and only 12% think it’s a bad investment. Furthermore, current renters are as bullish on housing as current owners, or perhaps even slightly more so.

“We can see that the renters in our sample expect home prices to grow at a slightly faster pace than the owners do, at both the one-year and the five-year horizon,” they wrote. “Thus, none of our evidence suggests that renters are reluctant to own for fear of making a bad investment.”

Case in point, in a blog post titled “Hey CNBC, shut up about millennials already,” HousingWire reporter Ben Lane bemoaned the lack of a sophisticated approach to his generation, despite massive amounts of news coverage.

“There are quite a few things that bother me about this. First and foremost, all millennials are not alike, no matter how many times CNBC tells me they are,” Lane wrote. “CNBC’s analysts seem to view millennials as a giant homogenous mound of humans who all think the same way, look the same way, do the same things and look at the world in the exact same way.”

I’m working on getting through to millennials, but I’ve learned to never underestimate what they know, what they expect, and how open they can be to shifting viewpoints.

Mortgage originations, on the other hand, seem closed to the prospects of change. With a mindset like the one we have currently, we don’t deserve millennial money. 

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3d rendering of a row of luxury townhouses along a street

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