It is a well-known fact that the population of millennials in the housing market has always been less in comparison to their former generations. There are numerous possible reasons for this viz. the past recession, unemployment, less income, ongoing student loan installments, or their inherent fear of not qualifying for a loan as yet. However, with the passage of time, this trend seems to be changing slowly. A current survey conducted by the National Association of Realtors have revealed that first-time real-estate investors are now claiming a greater share of the recent purchases made in the last few months.
Convincing millennials efficiently
Millennials are extremely appealing targets for mortgagees because of their potential to enhance mortgage sales remarkably. Before the housing market catastrophe in 2007, first-time home owners contributed almost 40% of the marketplace. Although the difference is huge, the research committee firmly believed that going ahead; millennials could themselves uplift home vending by 5%, if they decided to get involved in the trade.
The latent reason behind the downslide
Though there is a dearth of definite explanations concerning the exact reason for this age group to opt out of the act of purchasing a home, there are a lot of hypotheses in this regard. The media has disclosed a variety of information surrounding the striving housing market and the lack of credit has borne a lot of negative impact over this generation. Indeed, it is much harder to fetch loans for any purpose, especially when it comes to a young person who is already indebted due to an existing student loan.
Post-recession, the banks have also tightened regulations over mortgage lending. The market crash led to the disappearance of subprime loans but conventional home investors also felt the effect of the slump, since banks mandated requirement of both standard income and credit history, towards validating loan qualification.
Currently, though there is a welcome change for those looking to buy a new home, the message hasn’t yet percolated to the millennials as such. Many people who are living in rented houses as of now, but would like to have their own houses at some point of time, still preserve an inherent fear that it might be out of their budget or they would not be granted an affordable mortgage.
It is evident that there needs to be a change in approach towards this important category of promising investors, if they are to be seriously engaged in the home buying exercise. This does not imply that the whole burden is to be taken by the loaners. The government can step ahead in conducting awareness programs, which can change the current perception of borrowers regarding their eligibility to qualify for a home loan. Such continued efforts in showcasing the benefits of owning a home can ultimately influence millennials to come forward and buy their first home. Irrespective of the solution, this problem is in sight of many in the industry.
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