Our Millennial Home Lending Review Roger Odoardi Reviewed by: Jason Caruso Two of the biggest questions we hear when it comes to the housing market these days: Can millennials buy homes? Are millennials buying homes? Short answer: yes, they can, and yes, they are. Millennials, the generation defined as those born between the early 1980s and the mid-1990s, now make up 43% (NAR report, 2022) of all home buyers, which is the most of any generation. That may surprise some people, since there seems to be a cloud of doom and gloom hanging over the millennial housing market amid questions of affordability. We’re here with some data and expertise to help inform any prospective first time home buyer (especially millennials or Gen Z) that not only are their peers buying homes, but they’re doing so at a higher rate than other generations. And affordably, to boot. Not only is buying a home (for the first time or otherwise) possible, it’s happening in New England and all over the country. With some helpful tips and assistance from a trusted mortgage broker, you can be well on your way to buying your dream home. Millennials Are the Fastest-Growing Segment of Home Buyers At Blue Water Mortgage, we estimate that millennials make up 47% of all our home purchases over the past two years. It’s not just with us. Millennials are the fastest-growing segment of home buyers everywhere, despite the well-recorded financial challenges that many younger generations face upon entry into the real estate market. Younger millennials are defined as being between 23 and 31 years old, and older millennials are defined as being between 32 and 41 years old. Both segments of the millennial generation are buying homes, albeit at different rates, and most are buying for the first time. Check out this quote from Jacob Channel, senior economic analyst at LendingTree about where millennials stand in in the home buying landscape: “Though they often have less money at their disposal than members of older generations like Gen Xers and baby boomers do, millennials aren’t shying away from home buying. In fact, they make up the largest share of home buyers in many of the nation’s largest metros. As they continue to get older, get married and start families, the homeownership rate among millennials is likely to rise even further.” Millennials Are Mostly First-Time Home Buyers About a third (34%) of all home buyers in the United States in 2021 were first-time home buyers. That %age goes way up when you look at just the millennial generation. According to The National Association of Realtors report, over 4 out of 5 younger millennial home buyers–81%–purchased homes for the first time. Just under half (48%) of older millennials were first-time buyers. Either way you shake it, millennials are mostly first-time buyers. No matter what generation you’re in or your financial standing, we understand that buying a home for the first time is an intimidating process. However, with helpful tips from a reliable mortgage lender, your first venture into homeownership can be a breeze. Top New England Cities/Town for Millennials What are some of the top cities in New England for millennials? Check out the data below on where millennials are living and buying homes in the region. Metro Share of mortgages offered to millennials Average millennial age Average credit score among millennials Average down payment amount among millennials Boston, MA 61.08% 32.73 728 $59,599 Providence, RI 55.69% 32.42 719 $33,312 Hartford, CT 54.16% 32.64 717 $33,659 Source Tech Is Shaping How Millennials Are Buying Homes It’s no secret that technology has changed so much about our economy, real estate and home buying included. Millennials are utilizing technology in their home buying journeys, and understanding the tools available and how to use them can help you get over the line to closing a loan and a home. According to the NARS report, 65% of younger millennials found the home they ultimately purchased through the Internet. That number gradually decreases with older generations. However, while young millennials use tech to find and secure their homes, they are also the most likely to use an agent in the purchase process. The COVID-19 pandemic accelerated the popularity of virtual showings and e-closing, where all parties can sign documents over the internet. Buying a home is still the biggest purchase you can make. Keeping that in mind, less than a quarter (23%) of all respondents to a recent Zillow survey said they would be comfortable buying a home online. However, younger generations are more likely to be comfortable with the idea of buying a home online: 36% of Gen Z and 39% of millennials responded they’d be open to buying a home online. Tips for Millennial Home Buyers There are a few surefire ways to shore up your chances of securing a loan and buying your dream home. Check out these tips as you jump into the real estate market: Develop a good relationship with your mortgage broker. A mortgage broker is not like your freshman-year roommate: you’re not stuck with them. Make sure you do your research, and spend time talking to various mortgage brokers to ensure you have a good rapport and that you’re getting the best deal. A broker is your guide through the home buying process, so it’s important to feel comfortable with your working relationship. Make and stick to a budget. This one’s pretty evident. It’s easier than you think to veer off course from your well-laid budgetary plans or to get sidetracked by offerings outside your budget. It will hamstring you down the road if you overspend on your home, so we recommend knowing exactly what your limit is and what your plans are for staying under it. Have a rainy-day fund for unexpected expenses. This is why it’s important to stick to your budget: You never know what could happen. Many first-time home buyers report that they wish they’d known more about unexpected costs during and after the home buying process. It will be helpful to you and your budget if you’re prepared for these eventualities. Explore loan programs and grants. There are many financial aid opportunities out there for first-time home buyers. It can’t hurt you to educate yourself on what’s available, such as low-down payment conventional loans, government-sponsored first-time home buying loans and down payment assistance programs. Loan programs and grants vary by state, so make sure you do your research! Questions First-Time Home Buyers Should Be Asking Themselves You may be saying, okay, thanks, Blue Water. This is great information about the state of millennial home lending right now. But how does it help me, specifically? We get it. Home buying (especially for the younger generations and first-timers) can be a very personal process. So to help you understand your own unique situation as well as possible, and be as prepared as you can for when the time comes to buy a home, here are some questions you should be asking yourself. What is my budget – how much can I realistically afford? Would I prefer to live in the city, the suburbs or somewhere more rural? What type of property am I looking for? (e.g. a single-family home, a duplex, condo, townhome, a co-op, etc.) How many bedrooms and bathrooms do I need? (Be realistic and don’t forget to think ahead!) What are my must-have features in a home, and which features would simply be nice to have? What is important to me, in terms of location and community? (e.g. a good school district, proximity to work, room to grow, etc.) Our Millennial Home Lending Review, In Review Millennials make up the fastest-growing segment of home buyers of all types but especially of first-time home buyers. The market is more primed than ever for an even larger segment of young people to purchase a home. Technology is changing the way younger generations are finding and closing on homes, and when used correctly, these tools can help you move through the process seamlessly. With the right information and guidance, the path to owning a home for younger generations is much wider than some make it out to be. Whether you’re buying a home in New England or elsewhere, we’re here to help. Contact a broker today to get started on your home buying journey. Roger Odoardi Roger is an owner and licensed Loan Officer at Blue Water Mortgage. He graduated from the University of New Hampshire’s Whittemore School of Business and has been a leader in the mortgage industry for over 20 years. Roger has personally originated over 2500 residential loans and is considered to be in the top 1% of NH Loan Officers by leading national lender United Wholesale Mortgage.