Sales Program Director of Collaborative Learning at the University of Alabama Lexi Lowe discusses how to market to millennials.
Homeownership has often been referred to as the American Dream.
The average homebuyer is usually much older, has a career and steady income. Now that picture has changed. Millennials, who are typically viewed as renters, are aspiring toward homeownership which is possible with the Federal Housing Administration which offers its FHA loans.
According to RISMedia, there has been an increase in closed loans for homeownership. Eighty-Four percent of closed loans came from Millennials in January; and Enterprise, Ala. was one of three housing markets with the most millennial activity in January, according to the Ellie Mae Millennial Tracker.
Shawn Reeves, associate broker at Century 21 Realty Inc., said there are a number of reasons why loan activity has increased in the Enterprise area.
“Low interest rates, combined with our proximity to Fort Rucker and the fact that a house payment was often less than rent, probably had the biggest impact on our market,” Reeves said.
Ft. Rucker is an army helicopter training center in Enterprise. In the past year, having Fort Rucker near Enterprise caused an increase in financing a home, Reeves said, as many flight students attend Ft. Rucker and buy a home, using their V.A. eligibility or V.A. loan.
“Along with being a military town, we have many contractor and civil service positions available,” Reeves said. “Many filling those positions, do not have the option of a V.A. loan. [So] FHA is a great option for this group since FHA requires only 3.5% down payment.”
Despite the loan activity in Enterprise stemming from V.A. loans, the use of FHA loans are expected to increase. According to risemedia.com, more Millennials will be using FHA loans, which permits lower down payments and lower FICO Scores than traditional loans.
There are many things millennials should consider when deciding between renting and buying, Reeves said, particularly the tradeoff between lifestyle and a more expensive home. She said millennials should decide if they are willing to sacrifice their current lifestyle for a more expensive home; or if they would be satisfied with a less expensive home and keep their current standard of living.
She also said millennials should keep saving money because of the additional costs that come with buying a home such as moving fees, a home inspection fee and, of course, buying furniture.
“Remember, the dream of homeownership is held by many, but by not counting the cost and properly preparing, the dream can become a nightmare,” Reeves said.