Forget what you heard a few years ago about Millennials. They are not slackers or living on their parent’s couches. They have grown up. 40% of them have children. Their average annual incomes exceed $56,000 and when it comes to marketing mortgage products, the big number is that Millennials represent 46% of first time home buyers.
Where are They Moving?
This generation has a strong desire to chase the American dream, despite being hindered by student loans. In order to achieve what past generations have, they’ve got to do things differently. That means exiting large, expensive cities — and the banks and mortgage companies that serve them — in favor of so-called secondary markets. And so far, some of the most appealing markets appear to be in Rust Belt cities that have rounded the corner for revitalization.
According to Jeremy Sopko, co-founder and CEO of Nations Lending Corp. headquartered in Independence, Ohio, an analysis of origination and lending data at Nations Lending shows that not only do millennial buyers make up more than 46% of new U.S. home buyers for the first two months of 2019 — the largest generational segment of the market for the fourth year in a row — but their movement out of traditional big cities and into secondary markets is on the rise. From 2017 to 2018, millennial buyers surged 24% in Rust Belt cities while purchasing in larger cities like Dallas, Chicago and Houston fell more than 14%.
All of this is happening while the number of local community banks serving these soon-to-be flourishing real estate markets is plummeting. Fewer than 5,500 local banks existed in the U.S. as of last year. Small- and medium-sized lenders also continue to consolidate with larger institutions.
Build a Local Presence
With technology as the staple diet of the millennial generation, into which more than 80 million people in the US have been born, it should come as no surprise that millennials are largely rejecting the traditional banking experience that previous generations have embraced for so long. Online and mobile banking comes naturally to this cohort. It’s not even considered a luxury, but a basic expectation. However, it comes at the expense of abandoning the relationship-based, retail branch experience.