Do You Need to Reevaluate How You Think About First-Time Homebuyers?

In the mortgage industry, we sometimes tend to think of our prime first-time homebuyer market as the younger half of the Millennial generation. You know, the ones that are obsessed with plants and Instagram.

However, the recent National Association of Realtors report reveals that the median age of first-time homebuyers has risen to 33 years old, meaning we may need to focus on the older half of the Millennial generation (age 30-38).

As the average age of the first-time homebuyer increases, we must ask what’s causing that shift, and how can we use that knowledge to better market to those buyers.

First-Time Homebuyers Still Face Many Hurdles

We’ve heard some consistent themes over the past year about first-time homebuyers and the challenges they must overcome to buy homes.

Affordability

Affordability is perhaps the most pressing issue for first-time homebuyers. Housing prices have continued to increase across the country while wages have failed to keep pace.

To combat affordability, more first-time homebuyers are living with parents or relatives to help save money. Twenty-three percent of first-time homebuyers reported moving from such a living situation into their new home.

The use of gift funds has also increased, showing that even waiting to earn a higher salary has not alleviated the affordability issue.

Lack of Inventory

Lack of inventory is another issue that first-time homebuyers are facing. It also exacerbates the affordability issue. As interest rates continue to decrease, the demand for houses increases. However, a low supply means that the housing prices will continue to be driven up.

Builders themselves also face challenges in this environment. Property values have gone up, meaning builders cannot build and sell affordable entry-level homes at a profit margin that’s meaningful to them.

Piles of Student Debt

One last consistent issue Millennial first-time homebuyers are facing is the tremendous amount of student debt they hold. Young borrowers who come into the mortgage process already strapped with debt find that they cannot afford as much of a house as they want or cannot qualify at all.

Tweak Your First-Time Homebuyer Messaging

Knowing that the median first-time homebuyer is 33 years old, don’t jump the gun and assume that they’re likely married and have at least one child. The hurdles we mentioned above are not only holding Millennials back from the milestone of buying a home, but also other milestones like getting married and having children.

While this segment of older Millennials does have a high percentage of married couples purchasing, there’s a growing portion of the segment (17%) that’s purchasing as unmarried couples.

What all this means is you have a chance to diversify your messaging for first-time homebuyers that can apply to married couples, young families, singles, unmarried couples, and more. That includes getting into the persona of who’s buying. Maybe it’s a single female who treats her dog like a child. With that in mind, you could post a photo on social media with a pet owner and her dog in front of a house with the message “Let me help you and your fur baby buy your dream home.”

Shorter messaging like the above can lend itself to other applications like fliers, advertisements, and handouts at community events. These messages are meant to capture interest quickly because it relates to someone’s situation.

When you start having conversations with this diverse group of buyers, have the right materials at the ready, too. You’ll want to have information available on low down payment programs, gift funds, and how couples – married and unmarried – can qualify on joint income or just on one person’s income.

Overall, know that you need to be able to adapt with the evolving first-time homebuyer market. Being prepared and having resources available during those critical conversations will help you tailor your messaging to whatever kind of first-time homebuyer sits down in your office.

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