Millennials have surpassed Baby Boomers as the largest living generation, but their buying priorities are vastly different than their elder counterparts were at similar ages.
Renting vs. Homeownership
Growing up when the housing bubble began to burst and seeing their parents struggle through a volatile housing market hasn’t done much to lend support to the benefits of investing in a home. That, and a seemingly crushing student loan debt crisis has made millennials wary when it comes to where they are investing their hard earned cash.
What does this mean for the economy?
Nothing and everything.
When examining buying behaviors, there are definitely trend changes, but millennials are buying at the same rate as the generation before them; however, where they’re spending their money is the main difference.
Experiences and travel trump tangible materials; i.e. luxury cars and homes.
Many millennials are choosing to either stay at their parent’s homes or continuing to rent instead of jumping into the world of homeownership.
After the Brexit vote, Baby Boomers jumped on refinancing opportunities for their current mortgages. Refinance applications are increasing and surveys are indicating that a large percentage of Americans are in agreement that thanks to record low mortgage rates, now is a great time to make a home purchase, but millennials aren’t biting.
In the midst of a seemingly stable housing market with excellent mortgage loan rates, rentals have continued to climb with 37% of households renting in 2015; the highest volume since the 1960’s.
Key factors to consider
As millennials continue to influence the economy through their spending, the mortgage industry will need to adapt.
In order to maintain a stable housing economy, lenders will need to follow and track trends in order to offer services that attract millennial homebuyers.
Technology advancements should be a key focus. With a generation that is constantly connected and looking for virtual convenience, online services will be highly sought after.