Austrailian millionaire Tim Gurner declared that Millennials are unable to buy homes because of wasteful spending on items such as avocado toast. "When I was trying to buy my first home I wasn't buying smashed avocados for 19 bucks and four coffees at $4 each". Within hours of his remarks on TV's "60 Minutes," Millennials took to the internet to defend their generation's money habits. Acknowledging that avocado toast is not the culprit keeping Millennials from buying their first home, they are facing challenges with a competitive labor market and increased expenses on every level, not just the breakfast they choose to eat. Your credit union lending solutions could be the answer to some of those challenges.
Even though the market is tougher than ever, Millennials are the largest group of home buyers. With home values up 7% and fewer homes on the market than in 2016, buying a home is no easy feat in 2017. Additionally, Millennials are competing with seasoned, repeat buyers who are equipped with more capital and experience. Millennials go out to buy their first home and show up to open houses where interested bidders are making offers in cash.
The market has also seen a shortage of starter homes in recent years, which has caused a direct correlation to the increased price of homes. So while Millennials are more than interested, the homes are not within a first-time buyer's budget, and definitely not the prices their parents were up against when they sought out their first homes.
As if the challenges weren't already daunting, Millennials may still be making large monthly student loan payments to try and lessen their education debt. With student loan payments and rent prices being at an all time high, it's difficult for Millennials to save cash for a down payment. Instead of chalking it up to avocados and wasteful spending, credit unions should take this as an opportunity to educate their Millennial members. Not just on their credit union mortgage lending products, but on how to save money for their dream home. To do so, you must get into the mind of the millennial by getting creative and delivering products that will fit their lifestyle.
For example, companies like acorns.com are guiding a Millennials purchasing journey and helping them invest with easy and innovative solutions. If a user makes a purchase with their credit or debit card and it's $20.19, Acorns rounds the purchase to $21.00 and invests the 81 cents into a diversified account for Millennials new to the investing game. Now, imagine if this kind of saving technology was directly built into your core system. Recognizing that Millennials appreciate technology that provides easy solutions and can be accomplished with mobile apps, rather than criticizing them for laziness, will be a step into gaining their business.
By partnering with the Millennials instead of writing them off as uneducated or wasteful consumers, credit unions can lead the generation into a revolution of saving money and home buying.
