Millennials In The Workplace

In response to yesterday's blurb about the movie "Home Alone" being 25 years old Carol K. sent, "You know you're old when you watch 'Home Alone' and wonder how much their mortgage is." Pro Teck's Home Value Forecast for November identified that the majority of the top real estate markets are located on the West Coast. Four out of the ten CBSAs are at all-time highs, which include Bellingham, Portland, San Jose, and Seattle. Two out of the ten CBSAs are anticipated to hit new highs by the first quarter of 2017, which include Boise and Mount Vernon. The ten best performing metros include, Bellingham, WA, Boise City, ID, Modesto, CA, Mount Vernon, WA, Portland, OR, Sacramento, CA, San Jose, CA, Seattle, WA, Stockton, VA and Vallejo, CA. On the other end of the spectrum, some of the ten worst performing metros include, Joplin, MO, McAllen, TX, Tallahassee, FL, Detroit, MI and Jacksonville, NC.

And in retail news Network Funding launched its "Common Sense Lending Initiative." NFLP's Common Sense Lending Initiative is a collection of 5 Non-QM programs. "It's our way of bringing a little common sense back for qualified borrowers who deserve it," said President Matt Kiker.  "Our initiative includes five new programs we believe will give more families and individuals well-deserved access to the American Dream." The initiative's programs include the Homeowner's Access Program, Fresh Start Program, Investment Property Program, Jumbo Alternative Program, and Foreign National Program. "Is your company giving you the products and support you need to compete in 2016? Check out JOIN.NFLP.COM to see what a better Network could do for you.

SoFi made a name for itself in student lending, and the Federal Reserve Bank of Cleveland is out with a new study titled, "The Impact of Rising Student Loan Debt on Mortgage Borrowing." "While it's unlikely that student loans are the sole factor for the decline in mortgage borrowing across the United States, it is hard to ignore how the recent surge in student loan debt is changing the debt portfolio of young borrowers. With over 40% of young borrowers having a student loan, and debt payments comprising 20% of their income, it makes it more and more difficult for young people to take on a mortgage in the first few years after attending college. And as the number of student loans continues to rise, it is a trend that is likely to continue."

Bank of America reports it finds millennials check their phones 45x per day on average. And narrowing that down even more research finds 90% of younger millennials (18 to 24Ys old) say they check their phones at least 1x per hour or constantly. And in job news Deloitte research finds about 40% of millennials will be freelancers, temps, independent contractors or solopreneurs in the next 5 years. 

Why are researchers focused on Millennials, capitalized or not? Simply put, it is because as of Q1 of this year, millennials became the largest generation in the workplace. In fact, millennials represent about 35% of the workforce vs. 32% for Gen X, 31% for boomers and 2% for the silent generation (70Ys old or more). Another reason millennials are so analyzed is because they are the first generation to embrace smartphones, social media and all things Internet. This has shifted all industries, including banking & lending, as technology enables speed, simplicity and advancement more than we have ever seen before in our lives. This group grew up with the digital world, so it makes sense they embrace it, stay connected through it and share information using it. If you want to communicate effectively with millennials, you need to be technology-focused in your approach. Given the shift in the workplace to millennials, it is important for lenders and financial institutions to reestablish relationships with this generation of customers. Create strong social media strategies, communicate digitally, seek to enhance technology and keep the clutter down to a minimum to attract potential customers.

One of the reasons cited for folks born between 1982 and 2000 and is that they don't want to be tied down to a house in the suburbs forever. Well, one way around that is to buy a rental, in which case there is no being tied down. And buying rentals appears to be what many are doing. 

A Pew Research Center analysis of Census Bureau data finds 36.4% of women between the ages 18 and 34 lived with parents or relatives in 2014. That is the highest level since 1940, when 36.2% still lived at home. Of interesting note, the current group of young women is 50% less likely to be married as back then (median age has moved to 27Ys vs. 21.5 in 1940).

Kristin Messerli wrote, "I just published this article on the Millennial opportunity - I have realized recently that most lenders perceive the opportunity/shift in demand as a 3-5 year out problem. But I think that mortgage lenders need to act now or miss the Millennial market." 

That said, we still have a problem with the first time homebuyer. The percentage of first time homebuyers fell again to 32% from 33% last year and is the third straight annual decline. The 32% number is the lowest since 1987. "Normalcy" is about 40%. The big problem: affordability and a dearth of inventory. 

Getting older isn't much fun. Last week I got stumped while doing a crossword puzzle. It was a six-letter-word, and the first letter was an 'S'; part of the problem was I couldn't find the clue. I finally quit after an hour when my wife handed me my reading glasses, and pointed out I was doing a Sudoku. Being a part of the boomer generation comes with its notorieties, one being that those who fall into this category appear to be a part of the highest percentage of home owners....a record which may stand for some time. This should come as no surprise for those in our industry; however, recent U.S. Census Data indicates it's either an anomaly, a trend, or a systemic concern, depending on who's doing the talking. What we do know is that the U.S. home ownership rate peaked 10 years ago. Since then it has dropped from over 69% to under 64%, where it was a half century ago, with each percentage point representing more than a million households. An Urban Institute study this year predicted that in 15 years the home-owning rate will sink to 61%. Baby Boomers - far more apt to own than members of succeeding generations - will move or die. And Millennials, now 18 to 34, will be slow to own, either because they can't afford to or don't want to.