Millennials have not had the best luck when it comes to the economy. As the generation that graduated with record amounts of student loan debt and a poor job market, it’s no surprise that they have also been hit the hardest financially by the pandemic. According to a survey by Edward Jones and Age Wave, roughly a third of millennials and Gen Z have experienced an extreme or very negative impact on their financial security as a result of COVID-19, nearly double that of baby boomers.
Yet, despite the economic downturn, millennials have continued to be a driving force in the housing market. In July, Ellie Mae reported that millennials accounted for 61% of all purchase loans and their average interest rate fell to 3.25%, a record low for the generation.
Pandemic or not, millennials are key to the growth of the housing market. In collaboration with National MI, my team at Cultural Outreach surveyed 1,450 NextGen homebuyers (ages 22-37) in April and September to learn more about today’s homebuying millennials and their mindset in the midst of a pandemic. Through our research, we studied how this generation is approaching the home buying process, their fears, challenges and how COVID-19 has impacted their plans for homeownership. Below are a few of our insights:
Characteristics of mid-pandemic homebuyers
The ability to work from home was by far the biggest indicator of financial stability and optimism. In our September survey, seven in 10 respondents said they had the flexibility to work from home. Of that segment, the majority held at least a bachelor’s degree and had an annual income of over $100,000.
These respondents were 182% more likely to say the pandemic had a positive impact on their homebuying plans and even reported decreased stress in career, family, and finances.
In contrast, approximately one in three respondents said the pandemic had a negative impact on their homebuying plans. They were 2.5 times more likely to go into work, five times more likely to have increased stress in their career and less likely to hold a college degree. Unfortunately, women were also significantly more likely to express stress as a result of COVID-19 and a negative impact on their homebuying plans, even when controlling for income and children.
How COVID-19 impacted homebuying plans
Whether or not consumers are quarantined at home, people across the board are spending a great deal of extra time in their homes. Unsurprisingly, many of them have realized they could use a lot more space. Some want an office or a backyard, and they are looking for ways to manage the extra family in the home.
We discovered that while low interest rates are one factor in why NextGen buyers are purchasing a home, they are more likely to cite a need for more space and desire to move sooner than planned.
In addition to physical space, consumers are spending more of their discretionary income and time on household items and DIY projects. Homemade sourdough has replaced avocado toast as the stereotypical millennial trend of 2020.
COVID-19 is also making millennials think twice about their preference for city centers. From San Francisco to Brooklyn, NY, millennials are exchanging expensive lofts and proximity to bars for less expensive suburban homes with more outdoor space. According to a recent study by Pew Research, one in five Americans relocated this year due to COVID-19 or know someone who has, and it was the fourth most cited reason for buying a home in our NextGen survey.
We’ve compiled a list of ways lenders and housing professionals can remain relevant to today’s NextGen homebuyers below:
- Show that you care.
Despite the fact that the homebuying market self-selects for those who are more financially secure, the pandemic has had negative effects across the board, especially in mental health. It is more important than ever that professionals do not come across as sales-oriented or tone-deaf to the global suffering as a result of COVID-19.
- Use omni-channel communication.
In a time of social distancing, professionals are discovering new ways to connect and deliver services with technology. Video calls and video messaging are a great way to build trust with personable communication, while remaining safe and respectful to a variety of consumer preferences. Our survey indicated Instagram and Facebook are the top-used platforms by NextGen homebuyers and they prefer text and calls 2:1 over email.
- Share content that increases financial and mortgage literacy.
One in five NextGen respondents said they weren’t confident in any step of the homebuying process. As a professional guide for homebuyers, share content that empowers them with the information they need to feel confident. Ninety-eight percent of our respondents said they start their research online, but after buying, they say their real estate agent was their biggest source of trusted information. If you are trying to generate leads in this market, you must start with an online presence that meets your consumers where they are.
- Share home-related content.
Consider sharing content about DIY projects, home cooking recipes, or other home-related content. Did your sourdough bread turn out to be an epic failure? Post that to your Instagram story. This is the way people are building relationships with social distancing, so don’t miss out on the opportunity to connect.