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Millennials’ View Of Home Buying Turns Negative

Millennials’ perceived value in buying a home dropped below 50 percent, down significantly from post-Brexit high, according to the latest ValueInsured quarterly Modern Homebuyer Survey:

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In the third quarter of 2018, 48 percent of all millennials believe buying a home in America today is a good investment; this is a record low, down from 54 percent in the second quarter. The previous high was 77 percent two years ago.

Fifty-eight percent of millennials now agree buying a home is the best financial decision they can make for themselves and their family, another survey low in ten quarters.

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Just over six in 10 millennials (61 percent) now believe buying a home is more beneficial than renting, again a survey low, down from a high of 83 percent two years ago.

While 76 percent of all homeowners believe now is a good time to sell a home, only 39 percent of millennials who want to become homeowners believe now is a good time to buy a home.

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The ValueInsured Housing Confidence Index for millennials registered a score of 56.9 on a hundred-point scale in Q3 2018. It is the lowest level recorded, down 1.7 points from Q2, and down 10.1 points from a year prior.

In addition to reporting a steady slide in their conviction for home buying, more millennials now associate owning with sacrifices:

Nearly one in four (23 percent) believe they need to delay having children in order to afford buying a home

Thirty-two percent do not believe they can afford a healthy and balanced diet while saving for a home at today’s high prices

Thirty-one percent seriously consider relocating to another city to afford buying

“Conventional wisdom assumed millennials were buying homes later because they chose to get married and have children later,” says Joe Melendez, CEO and founder of ValueInsured.  “New research now suggests homeownership may be the cause, not the effect, of delayed family formation. It is an alarming trend, and we see more acute evidence in expensive housing regions.”

Among millennials who are still interested and motived to become homeowners “in the near future,” their anticipation is often filled with anxiety. Among motivated first-time buyers, 49 percent are concerned rising mortgage rates could make homes currently within their budget become unaffordable later; 67 percent are concerned they will not save enough for a home they would actually like to live in; and 52 percent believe a home they buy now will likely drop in value within one year. Sixty-eight percent are concerned about another housing crisis; and 64 percent admit they will likely experience buyer’s remorse after reaching their homeownership goal.

Their trepidation could be explained by the high stakes these millennials plan to undertake. Eighty-five percent in the survey expect their home down payment to represent over half of their total personal assets.

“Most homebuyers experience a healthy amount of jitters before such a milestone purchase – that’s normal,” Melendez said. “But the new normal is highly anxious, inexperienced buyers bungee jumping in without knowing if their safety harnesses will work. That is an unhealthy, bordering on dysfunctional trend that our industry needs to mitigate to ensure we do not lose an entire generation of future homeowners.”

Making The Digital Mortgage Easy

FinKube, a company that provides AI-powered Platform-as-a-Service solutions for a range of industries, has published a new white paper entitled “Simplifying the Digital Mortgage Process.” The new paper outlines some of the risks lenders face when making choices about the technologies they employ on the front ends of their mortgage origination processes.

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“It’s in the best interests of the mortgage technology vendor community for lenders to believe that meeting the digital requirements of modern mortgage borrowers is complicated,” said Jorge Sauri, founder and CEO of FinKube. “We don’t believe it is. Instead of investing in technology that changes the way the lender operates an existing business, there is far less risk in using adaptive technology that has the cognitive power to take the lender’s existing business digital. This requires the lender to rethink what it means to go digital, which is the focus of our new white paper.”

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In the paper, FinKube outlines the four objectives a lender must achieve if they hope to compete with the nation’s largest fintech lenders. It also explains how to win more customers without investing in an expensive call center, like the nation’s largest firms have done in order to serve as the back office for their digital front ends.

FinKube is the creator of ELSA, which stands for Electronic Loan Services Assistant. She is an intelligent assistant and uses AI and machine learning to enhance the origination process from origination to close. ELSA can gather borrower information, render decisions, automate time-consuming tasks and help lenders produce fully compliant mortgage loans in as few as 20 days.

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FinKube was founded by Jorge Sauri, an industry veteran with nearly 20 years of experience developing IT solutions and technology platforms for banks, lenders and real estate companies. He developed the mortgage industry’s first cloud-based software for underwriting subprime mortgages at Arc Systems and then developed a completely cloud-based LOS called MortgageDashboard.

To download a free copy of the white paper, visit the company’s website at http://bit.ly/2B5z9ya

About The Author

Tony Garritano

Tony Garritano is chairman and founder at PROGRESS in Lending Association. As a speaker Tony has worked hard to inform executives about how technology should be a tool used to further business objectives. For over 10 years he has worked as a journalist, researcher and speaker in the mortgage technology space. Starting this association was the next step for someone like Tony, who has dedicated his career to providing mortgage executives with the information needed to make informed technology decisions. He can be reached via e-mail at tony@progressinlending.com.