Homeownership is a cherished milestone, symbolizing stability, investment, and dreams fulfilled. When I think back on my own journey towards homeownership, I’m reminded of the significance it held in shaping my family’s future. As the housing market evolves, so do the aspirations of first-time buyers.

Much of the current commentary focuses on the (very real) affordability challenges caused by persistently higher interest rates and home prices. This commentary can overshadow both the aspiration of first-time homebuyers and the opportunity this cohort represents to mortgage lenders. Experian’s latest research sheds light on crucial trends, and we’re here to guide lenders toward serving this vibrant community.

Our research shows that 80% of Gen Zers and 68% of Millennials say they aspire to own a home someday. A remarkable 31% of Gen Zers and 30% of Millennials plan to purchase a home within the next two years.

Although consumer optimism may clash in some cases with current affordability, we see geographic regions where first-time homebuyers are already achieving greater success. With for sale inventory higher in May 2024 than it has been in years, and home prices easing in certain markets, we are encouraged about the expansion of opportunities for homebuyers.

To serve younger Americans and first-time homebuyers effectively, we must understand their needs, preferences, and challenges. Here are five strategies to assist mortgage professionals:

Bridge the knowledge gap: While many young consumers aspire to own a home, many don’t know where to begin. Our research shows 30% of Gen Zers and 21% of Millennials say they have a poor or no understanding of the steps one needs to take to purchase a home. Don’t want to build education materials from scratch? Many industry participants (such as Experian) offer consumer education data and tools you can incorporate in your own portals.

Find them what they want, where they want it: We are seeing a higher proportion of first-time homebuyers in more affordable locations, most notably in west and mid-western states. Additionally, our research shows an overwhelming majority (86%) of first-time homebuyers purchase single-family homes with 76% preferring newer construction. Tailoring your outreach to prospective buyers can set you apart from more generic marketing.

Understand their financial profile: A comprehensive understanding of the financial habits and profiles of first-time homebuyers is paramount for developing effective lending strategies. While most first-time homebuyers fall into the prime and super-prime score bands, recent trends signal a growing presence in the near-prime score band. Additionally, the income landscape for first-time homebuyers shows over one-third of these buyers have an annual household income of less than $90k, and 11% meet the FHFA low-to moderate income requirements. By knowing as much as possible about a prospect’s situation, lenders can design mortgage products that empower consumer financial success.

Meet them where they are: In today’s digital age, younger generations rely heavily on social media, online platforms, and mobile apps for research and communication. It’s tempting to assume “digital natives” are averse to other channels, but Experian research shows that 14% of home buyers still engage with direct mail and 19% with television. Knowing the engagement and conversion preferences of individual consumers can drive effective omnichannel presence.

Create the seamless digital experiences they expect: Gen Zers and Millennials expect a streamlined, tech-savvy mortgage lending process that aligns with their digital lifestyles. They expect access to tools such as automated employment and income verification to manage their mortgage journey. Investing in online tools enhances the borrower experience and improves pull-through.

Lenders, investors, and regulators all play a pivotal role in shaping the homeownership journey. By understanding these trends and tailoring our approach, we can empower the next generation of homeowners and turn aspirations into keys and houses into homes.

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