Every week, we ask a real estate professional for their thoughts on some of housing’s most pressing issues. This week, we spoke with Whitney L. Fite, the president and founding member of Angel Oak Home Loans. Whitney brings more than 20 years’ experience in new business development and sales leadership strategies within the mortgage and real estate industry.
Atlanta Agent (AA): What is the main thing stopping Millennials from buying homes in today’s market?
Whitney L. Fite (WLF): As we enter into the spring market, we are learning a lot about Millennials. High student loan debt may be a large factor preventing Millennials from buying. Having graduated during a time when high-paying jobs were hard to find, coupled with record high college, grad school and credit card debt, Millennials simply do not have the funds necessary for a down payment.
Also, many do not realize that there are various mortgage options apart from the traditional 20 percent down payment. Therefore, educating the younger generation is key to helping them take their first steps toward homeownership.
Furthermore, when this generation does take the leap, Millennials have specific requirements in mind for their first home. They prefer move-in condition homes and new construction homes, if they can afford it. As credit standards continue to ease, it will become increasingly feasible for new homebuyers to be able to afford their preferences.
AA: When conversing with Millennials, what are the main benefits of homeownership that you extol?
WLF: Rents are continuing to rise, pushing Millennials toward homeownership. About 5.2 million renters say they expect to purchase a house in 2015, which is up from 4.2 million last year. With employment improving and credit lending standards easing, we are seeing more and more Millennials consider buying over renting.
When we discuss homeownership with Millennials, we make sure they feel confident in their decision to buy. Arriving at that confidence means educating them on the financial responsibilities of homeownership, as well as the complexities of the mortgage process. We then highlight the positive attributes of purchasing a home:
- It’s a smart investment. Buying a home offers the possibility for appreciation in home value. Unlike renting, the equity you put into the home becomes yours when you’re still paying off your mortgage.
- There are tax advantages. Homeownership can save significant amounts of money every year because both mortgage interest and property taxes are tax deductible.
- Decisions about home improvements are entirely up to the owner. The homeowner is in control of how much is spent on the home, including future repairs and home improvements, which can ultimately increase the value of the home.
AA: And, finally, what things should agents keep in mind when dealing with Millennial clients?
WLF: It’s important for agents to keep in mind that Millennials are a generation that expects quick communication and unlimited access to information. While Millennials have access to information via the Internet, they are seeking agents to provide guidance and negotiation skills. First-time homebuyers are normally very uncomfortable with the homebuying process, and they find that nothing compares to face-to-face meetings or phone calls.
However, agents need to realize that this generation relies greatly on communicating via text messages and other mobile technology; in fact, Millennials are the most likely generation to conduct research about the home buying process on their mobile devices, and of those who do so, about 31 percent find their new homes via mobile research. This is something lenders and agents need to take into consideration, especially considering that Millennials now represent the largest group of homebuyers in America, making up 32 percent of the market.
Furthermore, the improving economy has enabled more Millennials to qualify for mortgages, and, in many select markets, they’re seeking jumbo loans. Low interest rates and loosening credit guidelines have lowered the barriers for many Millennials seeking homeownership.