Moving Up and Out With Millennials


briankossIf you watch the news, you’ve probably noticed something: Americans are obsessed with Millennials. These Americans, the ones born after 1981, are dominating the media these days. Every time I turn around I’m learning a new factoid about this inimitable group.

Over the past month, for example, I discovered that, contrary to popular belief, Millennials do not actually hate cars. I also know, according to one study, that the average Millennial checks his or her phone 43 times a day. I’m also now aware of the reasons Millennials get bored at their jobs, what cities they like to live in, what they like to wear, how they shop and what they like to eat. I don’t remember asking these questions, but I have gotten the answers, and more.

The bottom line is that our culture is fascinated with Millennials. Before you roll your eyes, know that this preoccupation isn’t without good reason. As a group, these 20- and 30-somethings have already made a huge impact on innumerable aspects of our society, simply with the way they use technology. They were the first generation to grow up with both the Internet and cell phones, and thanks in large part to their influence, millions of people who grew up without television are now on Facebook. Yet it often feels as though we have an unhealthy fixation on Millennials, as if they are a complex enigma that needs to be dissected and understood. If you ask me, I’d guess that, at their core, they are no different than anyone else.

The thing that does make Millennials unique, however, is that they hold the fate of the housing market in their hands. They currently make up 27 percent of the entire U.S. population, and at some point, a huge chunk of them are going to buy homes. Of course, I’m sure you’ve heard that most Millennials have no interest in buying real estate. It’s true that their life outlook seems to be centered around the theme of “you only live once,” or “YOLO.” And if it is, therein lies the key to converting the Millennial homebuyer.

The Millennial Borrower—A Fresh Look

The average mortgage professional today is 20 years older than the average Millennial, and these two groups are worlds apart in terms how of they grew up. Technology has had a fundamental impact on the Millennial’s upbringing. They are “hard wired” into using tools such as smart phones, websites, camera phones and mobile apps. They were raised with access to hundreds of TV stations, the Internet and downloadable entertainment. They don’t merely love instant gratification. They almost expect it. Don’t expect them to tolerate long wait times. Millennials tend to avoid choices that take time and involve a lot of steps. You think you’re tapping your feet during a long escrow? Imagine how you’d feel about the mortgage timeline if you’ve never had to await a page load on a dial-up Internet connection. If the tediousness and lag times involved in the process itself wasn’t enough to dissuade Millennials from being homeowners, many of them also saw their parents slave for years in the same job, to sink their earnings into a home that fell 30% or more in value during the crisis—or was lost through short sale or foreclosure. These factors have a huge impact on the way Millennials view buying a home.

There’s another big difference between my generation and the Millennials, which is that many Millennials still live at home with their parents. Some have even returned to live with mom and dad after graduating from college. That’s tough for many people my age to accept without judgment. When we were young, we couldn’t wait to move out on our own. But before your critical comparisons take over, think about the reality. Millennials do in fact face a more challenging economic environment than previous generations. In many parts of the country, salaries have not kept pace with home prices. And because of rising college tuition costs, many Millennials are saddled with large student loan debts which, when combined with today’s tighter credit policies, make qualifying for a mortgage an uphill battle.

There’s nothing wrong with wanting to live in the town where you grew up. But for many Millennials, those areas are simple out of their price range. Meanwhile, living in a more affordable area outside of town would intrude on their quality of life with longer commute times and greater distances to their workplaces, as well as the other aspects of their lives that bring them satisfaction, like their favorite coffee shops and night spots. So moving back home with mom and dad becomes the most attractive option.

The only way to get Millennials out of the nest and into their own homes is for them to believe that homeownership is not merely good for them, but an exciting adventure with huge emotional benefits. But to do this, they need to start thinking long term—and we in the mortgage industry need to help them. The only way is to sell homeownership. That’s the sizzle—but of course, the actual home is the steak.

YOLO-So Buy A Home!

I poked a little fun at all the trivia we hear about Millennials. But recently, AdWeek compiled some useful stats. For example, more than half, or 55 percent of Millennials believe their personal financial situation will improve within one year. More than 90 percent purchased something after hearing about it from a family member or friend. Herein lies the first key for the mortgage industry to reach this group.

Mortgage professionals who care about their futures need to be hitting their databases of past clients fast and hard, with specific attention on their Baby Boomer and Generation X clients that have adult children. Our message should be about the importance of financial planning—not for them, but for their kids. If parents are stuck in a “free landlord” situation, they should be coached into the role of “investor,” and compel their kids to save money every month in lieu of paying rent. The idea is for this money to be used later as a down payment on a house, perhaps with matching funds from mom and dad.

We should also be coaching our past clients to set up appointments for their children with trusted financial advisors, mortgage planners and Realtors, who can inspire this group to get in on the ground floor of a recovering market. The side benefit to parents planting the seeds of homeownership in their children is that they will eventually be free to sell the family home if they want to, instead of holding onto it because the kids moved back home.

At the same time, we need to be careful and not be too forceful with our message. We’ve all heard by now that social media and texting is the way to reach Millennials. These media may be great conduits, but it’s not really about the channel. It’s the message itself that is important. We need to be talking about the adventure of homeownership, and how it can be just as exciting as bungee jumping or a trip to Europe or anything else young adults dream of doing—only longer lasting and much more satisfying.

For example, some of the most popular shows on cable TV these days are those involving buying and repairing homes. These shows are particularly popular with young adults, whether or not they own a home or not. Using social media to share success stories like the ones seen on HGTV is a great way to get Millennials thinking about their own possibilities. In an era of increasingly younger and more successful entrepreneurs, we should be encouraging Millennials to think like entrepreneurs themselves, and the potential rewards of intelligent risk-taking on their long-term future. And, more importantly, every time we help a young first time home buyer, we should be sharing their story online, making it exciting and inspiring others to explore the possibilities for themselves.

The Bigger Picture

We can’t pin the entire responsibility for courting Millennials and enticing them into homeownership on our front-line mortgage professionals. The entire industry needs to get involved. Lenders, local Realtor groups, state housing agencies—everybody. We should also be looking to recruit more young, tech savvy loan officers, real estate professionals and title agents, and even consider bringing in marketing experts from outside the industry who are steeped in the new media channels used to communicate with younger consumers.

While it’s true that, in terms of pricing and factors like student loan debt, it is tough for Millennials to afford a home, to be honest, as far as credit requirements are concerned, circumstances are not much different for them than when their parents first entered the market. It’s true that lenders have really clamped down on criteria. However, between 5% down Fannie Mae loans, 3.5% down FHA loans and 0% down VA and Rural loans, and mortgage rates around 4.25%, the door to homeownership is actually much more open than it was 40 years ago.

There is no quick fix. I’m well aware that no amount of coaching, savvy marketing or Facebook posts will be powerful enough to move all 80 million Millennials to buy homes and transform the housing market, let alone overnight. The fact remains, however, that most Americans want to buy homes, Millennials included. People will only buy homes when it makes sense for them to do so. We just need to figure out what makes sense to the Millennial generation.

Whatever that motivation is, mortgage professionals who want to be in this business 10 or even five years from now need to act quickly. They need to get a handle on serving Millennial borrowers now. Millennials may seem mysterious to those of us from a different generation. It’s easy to get stalled in the perplexity of reconciling typical Millennial behaviors with our own. But those of us who can put aside what we read in the headlines and find ways to connect with Millennials will take a larger slice of the pie. I don’t think there’s any big mystery about that.

About The Author


In September 2006, Brian Koss joined Mortgage Network, Inc. of Danvers, MA as an Executive Vice President of National Production. Mortgage Network, a lender founded in 1988, currently runs a $2.5B annual retail business with a 98.7% customer satisfaction rating. Brian brings with him 25 years in the business and has personally lent as a Loan Officer over $1Billion in home loans. From 2002 to 2006 Brian was the SVP of New England for Countrywide Home Loans.