In a recent Study by Redfin that spanned 3,000+ homebuyers across 11 different homebuying markets revealed some interesting changes into the trends of homebuying. The way that Americans are buying homes and the things that are important to them when buying are changing. Understanding these changes as well as why these changes are occurring is vital to addressing homebuyers with information and assistance that they find useful and enticing.
Much of the change in the psychology of homebuying is due to the fact that millennials more and more are entering into the homebuying market. This generation, raised with technology and coming of age during the Global Financial Crisis, seem to have a very different perspective on homes, mortgages, and where to buy than previous generations.
Making an Offer
One of the most surprising aspects of the survey is that one-third of homebuyers made an offer on a home they hadn’t seen in person. That number the previous year was just 19% or less than one in five. Technology is certainly making it easier to explore a prospective purchase without setting foot within the home with online listings, 3D tours, videos, and the like, but the trend is still a sharp change from the trends of previous years.
With a deeper analysis on those statistics, it becomes evident that the driver in this divergence is the Millennial demographic. Baby Boomers, people born after WW2, buy sight unseen at a rate of only 12%. Millennials on the other hand, born into the digital age and far more reliant on technology on every level of decision, were buying new homes without ever visiting them at a rate of 41%.
That shows the mortgage industry how much emphasis has to be put into digital selling as opposed to the traditional open house.
Politics
Not surprising given the current polarization of American politics, but more and more homebuyers are becoming sensitive to buying homes in areas that share their political views. Again, this is far more exacerbated with the Millennial generation. Baby Boomers responded with 29% saying they would be hesitant about buying in an area that had differing political viewpoints. That number skyrockets up to 46% for millennials.
Understanding the importance of this trend is another factor that loan officers and mortgage brokers will have to consider when matching their clients’ lifestyle preferences to homes.
Rate Indifference
Surprisingly, Millennials were far less likely to be turned off of buying a home with rising interest rates than older buyers. If rates rose above 5%, then only 1 in 20 Millennials would cancel their plans to pursue a home loan. This behavior could result from two different factors. The first, Millennials are most probably going to be first-time homebuyers. They are eager to get into the market and start building equity. Older buyers more often already own a home and can be patient in rate shopping for the best time to purchase again.
The other reason that Millennials might be less rate sensitive is the significant amount of turmoil that the economy has experienced in their lifetime. Buying at a high rate might not mean 30 years of high payments, but instead a refi in a few years when the rates drop again. The rates have been historically low for a long time and Millennials may have that expectation that they’ll remain consistently low in the future. Would welcome the chance to help you with the process. Call/Text me: 612.701.5335 or Email at: Tim@TimLRamey.com
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