Millennials cautious, conservative with real estate: CUNA's Schenk
April 16, 2015
MADISON, Wis. (4/17/15)--While the housing market has made some strides in its recovery from the collapse in 2008, one fact remains: millennials continue to be absent from the market.
Part of the reason for this, Mike Schenk, CUNA vice president of economics and statistics, recently told MainStreet.com, is that younger generations are just taking a more conservative approach to home buying.
Only 38% of millennials own homes, according to Principal Financial Group (MainStreet.com April 16).
"They're much more cautious than people were pre-crisis, and I think a big reason for that is their parents," Schenk told MainStreet.com. "They learned from some of the mistakes that their parents made."
In addition to learning from their parents' miscues, millennials also carry historically high levels of student debt, which is an obstacle for potential borrowers.
Nationwide, student debt has climbed to $1.16 trillion, with the average borrower from the Class of 2015 on the hook for $33,050 (MainStreet.com).
On a positive note for credit unions, because millennials are being more careful in the home-buying process, they have become more wary of the banks that played direct roles in causing the financial crisis.
Perhaps not coincidentally, of the 3 million people to open credit union memberships over the last year, two-thirds were millennials, according to CUNA.
"Part of the reason is that credit unions have a long history of approaching not just the home-buying decision, but financing decisions generally, in a collaborative and consultative way," Schenk said. "That consultative process and that approach to the individual, not as a mortgage borrower, per se, but as an individual that has a broad array of financial needs--with the mortgage decision as part of that context--is a big deal."