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Millennial buyers are finding own houses

by David Smith | June 5, 2016 at 1:51 a.m.

Millennials, the generation between ages 18 and 35, are changing the way real estate firms market their homes.

Older generations often seek out real estate agents to begin the house-hunting process.

Contacting real estate agents is likely one of the last things millennials do in their homebuying process.

The reason is the amount of information available online for house-hunting, real estate agents say.

"This generation has a comfort with online information," said William Porterfield, the principal broker in central Arkansas for Redfin, a Seattle-based real estate firm. "They have had it their entire adult lives, all through college. And there is more information available online."

It is rare, Porterfield says, for millennial clients to ask him to find them homes.

"They come to me with information on homes they want, much more so than other clients do," Porterfield, 35, said. "They are just wanting my expertise in trying to buy it, everything from suggesting how to go about getting the mortgage, good inspectors I've used in the past, what insurance agents to use, how we should negotiate the offer."

Millennial homeowners are more likely to be "home rich" in the future, according to a Redfin survey.

Thirty-year mortgage rates haven't exceeded 5 percent since 2010, so no respondent to Redfin's survey had a mortgage rate above 5 percent.

"With home loans so cheap, millennial homeowners are privileged to inherit some of the lowest borrowing costs in modern history," the survey said. "Rock bottom fixed-rate mortgages will make it easier for young homeowners to build equity compared with earlier generations."

Millennials, in general, are optimistic about real estate as an investment, Porterfield said.

"They weren't in the market to buy when we experienced the housing crash in 2007-2008," Porterfield said. "But they have seen the stock market go up and down, and be somewhat volatile. Since 2008, home prices have been going up steadily. And Little Rock has had an incredibly stable market."

Because of changes in technology, even the process of applying for a mortgage has gotten more streamlined in recent years, said Scott McElmurry, chief executive officer of Bank of Little Rock Mortgage.

More signatures and more disclosures are handled electronically as opposed to face to face, McElmurry said.

"And we're moving to online applications as opposed to call-ins or face to face," he said. "I wouldn't limit that just to millennials, but certainly they do operate a lot more in that realm. We're looking at things to reach out and be more tech savvy because of them."

Millennials are tied to their smartphones, said Timothy King, a real estate agent with Keller Williams Realty in Little Rock.

"They are not as tied to contacting a real estate agent," King, 54, said. "So you have to go where they are -- Facebook, Twitter, Instagram, social media. You market your listings on those venues and those social media sites."

Millennials are now the most populous generation in the country.

Estimates from the U.S. Census Bureau indicate that there are about 75.4 million millennials in the country. They have overtaken baby boomers (ages 51-69), which has 74.9 million people, as the most populous generation.

Millennials who are first-time homebuyers often are unfamiliar with the process of buying homes, including how to get their loans preapproved or how to improve their credit scores, King said.

King pairs the potential homebuyers with financial experts who check the homebuyers' credit and, if necessary, show them how it can be improved. If there are blemishes on their credit rating, they may take a six-month hiatus from the homebuying process to improve it, King said.

Some millennials have backed out of buying their first homes when they discover the long-term commitments necessary to buying houses, King said.

"It was the maintenance on the home, paying the taxes and insurance," King said. "The more they learned, I think they realized it was more complex than what they were prepared to take on. And maybe the 15- to 30-year commitment overshadowed the joy of the process of buying a home."

The key to working with millennials is knowing how to communicate with them, said Pat Harris, chief executive officer with Coldwell Banker Harris McHaney Faucette Real Estate in Rogers.

"You have to be able to text," Harris said. "If you can't communicate with them, if all you can do is use the phone, you do have a problem. They are actually a good group to work with."

Harris has been in real estate for more than 40 years.

"The role of the Realtor is no longer that we have [listings of all houses for sale], but the role of the Realtor is to help [millennials] know about such things as the neighborhood or the schools," she said. "The actual information on the home itself has dropped down the list for what you provide. Real estate has changed, especially since the Internet."

SundayMonday Business on 06/05/2016

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