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millennials_emergeOpinions on where real estate prices are heading from here might be mixed, but one thing is becoming increasingly clear: Millennials will be a big part of it. According to a recent survey from the National Association of REALTORS® (NAR), the so-called millennial generation—depending who you ask, it’s defined as those born between the early 1980s and late 1990s—comprised the biggest segment of homebuyers across the country last year, making it the second year in a row to hold this key market-driving status. The survey found that these 18- to 34-year-olds made up 32 percent of the market last year and 31 percent of the market the previous year.

For brokers, this emerging segment represents the future of the real estate industry, and courting them requires a different approach than doing business with members of previous generations. No matter what, though, you can’t afford to miss out on these young, new homebuyers, says Diane Cummins, immediate past president of the Hudson Gateway Association of REALTORS® in the northern suburbs of New York City.

“They are going to be larger than even the [baby] boomers. There are more of them,” Cummins explains. “When and if they become homebuyers, it is going to be a remarkable clump of business that comes our way.”

Cummins is the manager of the Coldwell Banker brokerage in Bedford, N.Y., an upscale sleepy community in Westchester known for its celebrities—Martha Stewart, Ryan Reynolds, Blake Lively and Bruce Willis have all taken residency in the tiny hamlet—and horse farms. However, even her office has been seeing an influx of millennial buyers.

“They’re really starting to emerge,” she says.

But this generation of homebuyer is unlike any other that the veteran real estate broker has dealt with. For one, they typically come to brokers with most of their research already done through Internet searches and online searching tools. The technological dependency demonstrated by this generation doesn’t necessarily mean that they are “tech-savvy,” but they typically know what they want by the time they seek out a broker, Cummins says.

“They are totally technology driven,” says Cummins. “They do their own research, but they rely more on agents than any other buyers.”

This is where the opportunity lies, Cummins says. Reaching millennials through modern means, such as social media or geo-targeting smartphone apps, can be a very effective way to make first contact. After that, she says it’s best not to waste their time with explanations about different types of products or touring different neighborhoods. They likely know all of that already—all the way down to the price per square foot they’re willing to pay.

“They’re very busy and, more importantly, they believe that everybody has a role for them,” Cummins says. “They know what they like, and they want to direct us.”

Perhaps surprisingly, this new cutting-to-the-chase, home-buying culture seems to play well—and efficiently—into the business world of the real estate broker.

“When it comes to the art of getting it done, they want to use a REALTOR®, ” believes Cummins. “They realize that this is not their job. They’re busy doing something else.”

Of the millennials who bought a home in 2014, the median age was 29, the NAR survey found. They were getting out of college around 2007, just as the housing market was starting to implode and take away a huge chunk of jobs from the national economy.

These young adults, many riddled with debt from college loans, didn’t stand much of a chance back then, and they had to resort to renting or living with their parents for quite a while.

“They are definitely a different animal,” says Cummins. “They’re underemployed and overdebted.”

But living at home for a long time can have its advantages, because they’re able to save money that can now be used as a down payment, she adds.

Millennials who’ve been lucky enough to rent are also now making the move to buy a home; their rents have increased so dramatically that it’s just no longer economically viable not to buy.

The NAR survey found some more interesting statistics about these buyers:

– Their median income was $76,900, up from $73,600 in 2013.
– 97 percent of them financed their purchase, compared to a shockingly high majority of buyers who’ve been paying in cash for the past few years.
– The median down payment for a millennial last year was 7 percent.
– 25 percent of them were gifted money to aid them in the first purchase.

Now, new Federal Housing Finance Agency policies are taking hold, which will incentivize millennials even more. The 3-percent down payment program, which is available for most homebuyers who haven’t owned a property in the last three years, was echoed by Fannie Mae and Freddie Mac at the end of last year. Additionally, mortgage insurance rates on an FHA loan were cut to 0.85 percent, down from 1.35 percent—an average savings of $1,000 per year.

“The new low-down payment mortgage program…will safely serve creditworthy borrowers who lack the resources for substantial down payments plus closing costs while mitigating risk with strong underwriting,” says NAR President Chris Polychron.

NAR economist Ken Fears says that these low down payments are starting to become popular for first-time homebuyers, many of them millennials.

While many of them prefer to buy condominiums and live in active urban neighborhoods that offer close commutes to their jobs, there might be some issues with FHA financing depending on the building due to the Administration’s policy requiring that a certain percentage of the building be residential, Fears explains.

Another issue that comes up with millennial-rich condos is the percentage of rentals in the building. Usually, a building needs to be at least half owner-occupied to qualify for one of these FHA products, but as Fears says, “Fannie and Freddie do not have such a requirement, which makes the 3-percent product more appealing to first-time buyers or millennials looking to buy a condo.”

Andrew King is an award-winning journalist with 15 years of experience with the Gannett newspaper company, appearing in The Journal News (Westchester, NY), Asbury Park Press and USA Today. He also contributes to The Real Deal, and