Issue link: https://read.dmtmag.com/i/594075
NOVEMBER 2015 26 THE JOURNAL Boomers, Boomerangs and Millennials Where will the next crop of homebuyers come from? BY SCOTT STROUD MARKETING CONSULTANT The housing market is continuing to im- prove. But, that doesn't mean that it's return- ing to where it was before the crash. The numbers might be the same, but in most cases the buyers are quite different. The Boomers have been quiet lately, but are coming back, as are families that lost their home to foreclosure or bankruptcy in the recession. And despite what you many have heard, younger buyers are jumping into home ownership, particularly in affordable markets. So, who will you target, and how will you reach them? Baby Boomers (b. 1946 – 1964) The Boomers ruled the housing marketing – and in fact the entire economy – from the 1990's through the early 2000s. But since this group controlled so much of the wealth, they also bore the brunt when the market crashed. Since then, this group as a whole has been pa- tiently waiting, content to remain where they are until the time is right to make a change. Well, it seems the time for many is right now. Over the next five years boomers are ex- pected to spend an estimated $1.9 trillion or more on home purchases. Of these, there are two distinct buyer groups: those that will re- main close to home and family, and those that will retire to a more comfortable climate. The 'close to home' group will have a home to sell, and their objective will be to find a home that will allow them to more comfortably age in place. The issues that will effect their decision will be maintenance, cost, and location to fam- ily. In the last year, retirees have pushed sales in resort markets up by a record 57.4 percent. The National Association of Realtor's Chief Economist Lawrence Yun attributes the hike to "baby boomers moving closer to retirement and buying second homes to convert into their pri- mary home." They see the inevitable rise in housing prices, and even if retirement is a few years away, they are buying now while home prices are still affordable. How to sell them: Focus on long-term sav- ings, low maintenance and safety. Active Adult and Aging in Place communities are at- tractive to this group who want to maintain in- dependent living for as long as possible. Transitioning from wage-earner to fixed income creates worries about the future, so be prepared to demonstrate how your new, energy efficient low maintenance home will help them achieve peace of mind and a consistently lower cost of living. Millennials, or Gen-Y (b. 1982 – early 2000s) Much has been written about the reluctance of younger adults to enter into home ownership. It has long been predicted that as a group Mil- lennials would prefer to rent. It turns out that, while renting is gaining popularity with nearly every buyer profile and age group, home own- ership is becoming more attractive to those in their 20s and 30s. Some months back, Zillow.com chief econ- omist Stan Humphries predicted that, "by the end of 2015, millennial buyers will represent the largest group of homebuyers, taking over from Generation X." Whether they've assumed the role as the largest buyer group in the manufac- tured housing segment has yet to be deter- mined. Still, there is no denying the buying power of these younger first-time buyers. How to sell them: Focus on location, afford- ability and financing. While their parents and grandparents are likely to be cash buyers, the challenge for younger buyers will be qualifying for financing. Their credit isn't the issue, but rather saving enough for the required down payment. This is an area where we, the MH industry, might have a distinct advantage over the conventional site-built market. Lower prices make ownership more attainable, and more attractive financing programs are being in- troduced every day, outpacing the mortgage in- dustry and giving you better tools to attract this buyer group. Boomerang Buyers Nearly 8 million families lost their homes to foreclosure since the housing bust of the last decade. Many of them, around 700,000 this year alone, have had time to financially regroup and repair their credit, and they are back on the market and able to purchase again. And that's just the beginning. Over the next five years an estimated 2.2 million previous homebuyers will again be eligible for financing to purchase a new home, making these boomerang buyers a major force in in generating demand for new homes over the next several years. The wait times for qualifying for a loan can vary depending on the former homeown- ers' circumstances. Typically, though, Lenders require seven years of credit repair after a fore- closure and four years after a short sale before they will consider another mortgage. How to sell to them: Focus on education, credit repair and the benefits of home owner- ship. Many who have lost their homes in the past may be gun shy when it comes to getting back on the homebuying bandwagon. Others may not realize that they can or will soon be able to own a home again. Partnering with lenders and local agencies to educate consumers on how to obtain and un- derstand their credit report is a good start. Sponsor credit repair or financial management clinics – you'll probably find local agencies that provide these services. Promote home owner- ship as a positive force for the economy and for wealth building. You'll find a number of buy- ers that may now (or shortly will) qualify to buy your home, they just don't realize it yet. Edu- cating this buyer group on what it takes is para-