Today’s ‘Ask the Expert’ column features Matt Vernon, Home Loan Sales Executive with Bank of America.
Q: Who are today’s homebuyers and what do I need to know about them in order to best serve their needs?
To prepare for the spring buying and selling season, real estate agents traditionally focus on home price appreciation trends, the direction of mortgage interest rates and the pace of home sales. It is a relevant process, but how helpful is it toward day-to-day efforts to boost your sales? Particularly as we see the changing tide of today’s first-time buyers?
Rather than basing plans and strategies on economic factors largely out of your control, ask: Who are today’s homebuyers? What is different about them from past buyers I’ve worked with? How can I adapt my model and perspective to serve their needs and grow my business?
Who are this year’s homebuyers?
Buyers are now coming from segments that have been underrepresented in recent years. That includes first-time homebuyers, many of whom may also be categorized as millennial, multicultural, and/or singles. Let’s take a closer look at these categories and their status as prospective clients.
Millennials. Adults under 35 fall into the demographic category that historically comprises first-time buyers. Despite reports about record numbers of younger adults living with their parents, there are strong reasons to be optimistic about their prospects for homeownership. In the Fall 2013 Merrill Edge Report, 83 percent of respondents in this group reported that they live by a budget, and 37 percent said they are willing to live a frugal lifestyle to meet long-term financial goals. When it comes to home-buying, anecdotal evidence from Bank of America’s experience in the markets across the U.S. suggests that this age group is concerned about what they can afford, how much they owe versus their income, and how much cash they need to save for a down payment. We’ve also noticed that Millennials seem to be more optimistic and confident than homebuyers in other age demographics.
Multicultural. The market segment typically described as “multicultural” is comprised of African American, Asian, Hispanic and other culturally, ethnically and racially diverse consumers. Over the next 10 years, at least 75 percent of new households formed will be multicultural, according to Harvard’s Joint Center for Housing Studies. As a group, multicultural households will have a powerful impact on the housing industry. Here’s just one of the many data points that point to growing business opportunities: In the 100 largest metropolitan areas, there were 1.7 million more Hispanic owners in 2010 than in 2000, representing a 51.7 percent growth rate. In 2012, Hispanics accounted for more than half of the total net increase in owner households in the U.S., according to the National Association of Hispanic Real Estate Professional’s 2012 State of the Hispanic Homeownership Report.
Singles. According to the National Association of REALTORS®, the overall market share of single homebuyers stood at 25 percent in 2012 and 2013. While this is lower than earlier in the decade, this percentage still translates into one-in-four home purchases. Of particular note, single women have purchased homes at twice the rate of single men in recent years.
How can I serve the needs of this year’s homebuyer?
From a lending perspective, we are highly focused on helping prospective first-time homebuyers—in all demographic categories—to prepare for homeownership. Our overriding philosophy is to provide access to free educational tools and resources about personal finances, including budgeting, credit, home financing and the responsibilities involved in homeownership. We offer simple, interactive tools to help people understand the steps they need to complete to achieve their goals of owning a home.