As Millennials continue to enter the housing market in growing numbers in the coming years, those of us who work in housing will have a tremendous opportunity to help make the American Dream of homeownership a reality for the largest and most diverse generation in American history. To do so as successfully as we can, we need to recognize and embrace the most important ways the Millennial generation differs from previous generations of homebuyers – and their diversity is at the top of the list.
It isn’t news that the U.S. is becoming more diverse, but Millennials are transforming our nation’s demographics in a big way. Currently 54% of Americans under the age of 35 are white, compared to 75% of those 55 and older.
Harvard University’s Joint Center for Housing Studies estimates that around 75% of our nation’s household growth over the next decade will come from minority-headed households. As recently as 2012, fewer than 30% of U.S. households were headed by minorities.
This is exciting – an evolving and diverse populace has brought America vitality, creativity and growth throughout its history. Recently there has been some discussion about why comparatively fewer Millennials are entering the housing market. Some have suggested that it might be because Millennials are not as interested in homeownership as their predecessors, but in fact research shows that they overwhelmingly aspire to own homes.
A survey conducted by Apartment List found that only 6% of millennial renters said they always expect to rent, and Trulia found that 80% of 18-34 year-olds said that owning a home was part of their personal American Dream.
However, many people today – whether or not they are Millennials – simply can’t break into the housing market. Though the economy is doing well in many ways, the aftermath of the recession still looms large. Wages remain depressed and there aren’t enough homes for sale to meet high consumer demand, especially more affordable, lower-cost homes.
Many of these challenges continue to be especially acute for first-time homebuyers, both young people and minorities of all ages. An economy that continues to remain strong and stable will help lessen some of these challenges, but we can’t just wait for them to go away.
The private mortgage insurance industry, which helps low- to moderate-income borrowers purchase a home with less than a 20% downpayment, also needs to make sure we are always proactively working with communities across the country to help them meet their demand. Part of that is simply understanding the needs of different segments of the community when it comes to housing. For instance, Hispanics are currently the fastest-growing group of homeowners in the country and in 2015 were the only ethnic group to raise their rate of homeownership.
It is projected there will be 3.2 million more African American households in 2025 as there were in 2010. And immigration, which is a key component of household growth, is being driven more by Asians than any other group.
Sustainable long-term home ownership continues to be the most powerful tool we have to build household wealth, and we owe it to all Americans to help more people to take part in that opportunity. Homeownership also builds stronger communities to provide a stable foundation for our children.
Another key to successfully meeting the needs of the diverse Millennial generation is to build strong relationships.
Radian has forged exclusive partnerships with organizations that lead the way in helping meet the needs of homebuyers in the African American, Hispanic and Asian communities, including the National Association of Real Estate Brokers (NAREB), the National Association of Hispanic Real Estate Professionals (NAHREP) and the Asian Real Estate Association of America (AREAA).
Working hand-in-hand with the people who know and serve these communities best enables us to support our lender partners as we strive to make the dream of homeownership come true for many Americans. Making sustainable homeownership accessible for Millennials isn’t simple or easy. But by working together, we can help ensure that homeownership remains a cornerstone of the American Dream for millennials and the generations that follow.