That’s according to the Real Estate Witch 2024 Millennial Home Buyer Survey, performed in October last year by Real Estate Witch and Clever. The study found that 78% of millennials still say that a home purchase is part of the American dream, but the difficult buying environment has impacted would-be millennial buyers practically and psychologically.

Ninety-three percent of millennials in Clever’s study said that the market has impacted their homebuying plans, while 76% are concerned that it will get worse before they buy a home. Many have acknowledged that compromises will have to be made once they are able to buy, with Clever’s survey finding that 42% of millennials expect to make concessions on the characteristics of a home and 29% expect to make financial concessions.

Additionally, 30% of millennials anticipate maxing out their budget, and 29% expect to pay more than a home’s asking price. Twenty-nine percent foresee having to take part in a bidding war, while 28% are preparing to have at least one offer rejected. Sixty-seven percent of millennials would be willing to buy a fixer-upper, although 18% who did said that they regret doing so. Some potential millennial buyers would be willing to bite the bullet on some extreme problems: 67% said they’d buy a home containing asbestos, 62% would buy a home with mold and 58% would purchase a property with foundation issues.

Prospective millennial buyers are also cognizant of the harsh interest rate climate, with 50% of millennials saying high interest rates are a barrier to homeownership and a whopping 96% indicating that high interest rates have affected their homebuying plans. Thirty-nine percent expect to pay a higher interest rate than they would like, and 67% regret not buying a home when interest rates were lower. However, millennials are so determined to buy that 78% — more than three in four — would consider accepting an interest rate that’s higher than the national average. In fact, 65% would accept an interest rate of at least 10%, while 23% would accept an interest rate of 15% or higher.

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 “Millennials and Gen Zers don’t need to navigate the complex waters of real estate investing alone.”

Not all hope is lost. With real estate investment strategies and the guidance of previous generations, millennials and Gen Zers can find alternative avenues to homeownership. Mortgage originators can help these younger borrowers find their path forward.

Unique challenges

Today’s housing market is vastly different from that of only 20 or 30 years ago. Millennials (those born between 1981 and 1996) and Gen Zers (born between 1997 and 2012) face unique challenges in accessing the property ladder.

While the cost of living continues to increase, wage growth hasn’t kept pace. From 2009 to 2021, median wage growth in the U.S. never topped 4% year over year and often was below 3%, according to Federal Reserve data. Wage growth surged during the COVID-19 pandemic, but years of stagnant wages took a toll. This disparity resulted in younger generations having less purchasing power than their parents at the same age.

Meanwhile, the burden of student loans, which many millennials and Gen Zers took on in pursuit of higher education, drains a significant portion of their income and limits their ability to save for a downpayment. Millennials account for almost half (47%) of the nation’s outstanding student loan debt and have an average outstanding balance of more than $42,600, according to TransUnion. Gen Zers hold an average outstanding loan balance of nearly $24,500.

Housing prices, especially in major urban areas, have seen exponential growth recently. A lack of housing supply, coupled with high demand and elevated interest rates, has resulted in home prices that are often beyond the reach of the average millennial or Gen Zer. But amid these challenges, there’s an avenue that presents a viable solution — real estate investing.

Investment strategies

While traditional homeownership may be challenging, real estate investing offers younger generations a way to build wealth and eventually own a home. One of the first ways to do this is for younger renters to consider purchasing a rental property.

By purchasing a property specifically for rental purposes, millennials and Gen Zers can generate passive income. How is this an option? If a younger borrower makes a decent salary in a high-cost city such as Boston, New York or San Francisco, they could purchase a rental home in a less expensive area nearby. The rental income could cover most if not all of the mortgage. Over time, this rental income can be used to pay down the mortgage, and the property can appreciate in value, building valuable equity for the owner to eventually cash in.

Another strategy is called house hacking. This involves living in one unit of a multiunit property while renting out the others. This could be a duplex, triplex or fourplex with long-term rentals, or even a multifamily property (five or more units) where the borrower relies on short-term rental platforms such as Airbnb, Vrbo or Golightly (an invitation-only, short-term rental app exclusively for women). This allows the owner to live for free or at a reduced cost, all while gaining equity in their property.

Millennials and Gen Zers also can team up with partners, either peers or seasoned investors, to co-invest. By pooling resources, they can enter the market sooner while sharing the risks and rewards. Real estate investment trusts (REITs), which offer a way to indirectly invest in property without taking out a mortgage or placing one’s name on the title, are another option. People can invest in commercial or residential REITs. They provide an opportunity to benefit from the real estate market while using less capital.

Crucial support

Millennials and Gen Zers don’t need to navigate the complex waters of real estate investing alone. Their parents, many of whom benefited from a more forgiving housing market, can play a crucial role in guiding and supporting them.

Parents can encourage and support their children in obtaining real estate education. Workshops, courses, books and seminars can provide the knowledge needed to make informed decisions. If financially feasible, parents might consider gifting or lending a portion of a downpayment to help their children enter the market sooner.

“Economic pressures, student debt and skyrocketing home prices have combined to create an environment where a significant portion of these generations struggles to enter the market.”

For younger consumers struggling with credit or income verification, parents can act as co-signers to help them qualify for a mortgage. Co-signers can be family members or friends, but these are legally binding contracts, meaning that the lender can come after a co-signer if the primary borrower defaults on the mortgage.

Co-signers are different from co-borrowers. A co-borrower’s name will appear on the property title, but a co-signer’s name will not. There are drawbacks to co-signing that should be considered carefully, but this could be a viable first step for younger borrowers to achieve homeownership.

Alternatively, parents can invest alongside their children, bringing both experience and capital to the table. In doing so, parents not only help their children access the benefits of real estate but also pass on the invaluable lessons of wealth building and financial independence.

● ● ●

The challenges that millennials and Gen Zers face in achieving homeownership cannot be underestimated. Yet with the power of real estate investing and the supportive hand of the previous generation, there are viable pathways to navigate this challenging terrain. Mortgage originators would do well to offer this advice to younger generations.

By embracing alternative strategies, seeking knowledge and collaborating, younger borrowers can achieve the dream of owning a home. It might look different than the traditional route, but the destination remains the same: a place to call one’s own and a foundation for future wealth. ●

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Originators must earn the trust of their clients and provide sound advice beyond considering factors such as the interest rate or the loan term. Understanding clients’ finances and short- and long-term goals is critical for providing effective advice and ensuring affordability in the community where the borrower desires to live.

“Mortgage companies are recruiting the top-producing and most talented professionals, a fundamental reminder that relationships and service are still at the core of corporate success.”

Facing a highly competitive home purchase market, lenders and originators are diversifying their product mixes and updating their tech stacks to capture additional market share. Mortgage companies are recruiting the top-producing and most talented professionals, a fundamental reminder that relationships and service are still at the core of corporate success.

Lenders face a substantially different recruiting and retention landscape as the baby-boomer generation, a large segment of the mortgage labor pool, begins to reach retirement age. Even as talent is becoming more indispensable than ever before, current employees and potential recruits are seeking positions based on changing criteria.

The nationwide lockdowns fueled by the COVID-19 pandemic significantly impacted how many younger generations perceive employment and their careers. Specifically, their goals and standards for job satisfaction have changed.

Suddenly, commuting to a downtown office wasn’t simply a matter of fact but an option alongside remote or hybrid employment. This was a seismic shift of the workforce’s fundamental perception of job satisfaction. And it’s something that mortgage companies seeking to thrive through the remainder of the current market cycle — and into the eventual rebound — must account for in their business models.

Evolving management

Mortgage lenders still depend on qualified originators to act as front-line specialists and decisionmakers. Even as the industry discusses concepts like “automating everything possible” or advanced technology like natural language processing, the reality is that most borrowers still desire a trained, professional expert when the time comes to select and commit to a mortgage.

While technology is essential, its role is to assist and empower mortgage professionals, not replace them. This inherent demand, combined with the significant change in how the labor pool views potential employers, has started to mean a need for more flexibility in the workplace and greater empowerment for the employee.

“Highly recruited top producers will consider how well they’ll be able to perform their jobs with a new employer, especially if they fear they’ll be hamstrung by a lack of technology or poor tools.”

Performance management has long been a popular strategy for all types of employers. In essence, this requires the collection of measurable results to determine how efficiently and effectively a particular employee has been performing their role. The employee then receives performance-based feedback, meriting increased compensation and/or promotion for success (or accountability for mistakes or shortcomings).

Today, many executives and supervisors are moving past performance management and toward an enablement-based coaching and empowerment approach. With this method, the manager accommodates reasonable errors as employees perform their jobs and uses these mistakes as instructional examples.

Of course, this approach also requires that an employer cede more decisionmaking authority to front-line employees than they might have traditionally done in a performance management environment. Many studies show that today’s employees — and not just those in the mortgage industry — increasingly base job satisfaction not solely on compensation but on the pride they take in performing their roles.

In the mortgage industry, there is some disagreement over the effectiveness of the work-from-home approach. Its popularity is a strong indicator that employees value flexibility. This includes flexibility in where and when they perform their duties. Although the efficacy of a hybrid approach can vary dramatically based on what the business does and how it operates, it’s clear that the flexibility (and inherent trust) that comes with such an environment is often considered by current and potential employees.

Office culture

Management must provide the most effective tools for their teams to perform their duties — including practical, real-world training. Highly recruited top producers will consider how well they’ll be able to perform their jobs with a new employer, especially if they fear they’ll be hamstrung by a lack of technology or poor tools.

Finally, leadership and management are about much more than coaching or measuring metrics. The availability and presence of executives and decisionmakers at all levels is something that employees notice.

In office cultures where managers and leaders are willing to explain critical decisions or receive constructive feedback, employees tend to feel more empowered and ultimately more loyal. Trust is a powerful motivator for productivity and employee satisfaction.

Similarly, employees are aware of the communication styles of their leaders. Do they only hear from the CEO once a year via an all-hands teleconference? Do interactions between executives and front-line employees tend to be one-way communications, or do decisionmakers legitimately accept and interact via two-way conversations? Again, the most robust cultures and desirable employers tend to feel like comprehensive, collaborative teams that pull in the same direction.

Like many industries, the mortgage business is undergoing massive change in many ways. As a result, the most successful mortgage companies will build upon a team mentality that fosters empowerment, coaching, adaptability and effective communication. These companies will attract the top talent and, even more importantly, retain it. ●

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Emily is a fictional example of someone who typifies the challenges faced by today’s consumers, and she is far from alone. As of third-quarter 2023, 43.6 million Americans are shouldering $1.644 trillion in federal student debt, according to the U.S. Department of Education. With private student loans also counted, borrowers owe a total of $1.757 trillion, equating to an average balance of more than $40,000.

“Mortgage lenders have not always felt the need to get into student lending or refinancing, but that is changing as the demand for mortgage products dwindles.”

The age range of those with educational debt is exceptionally broad: 7.1 million borrowers are younger than 25 years old; 15.1 million are 25 to 34; 14.7 million are 35 to 49; 6.5 million are 50 to 61; and 2.7 million are 62 or older. Among them are 3.7 million Parent PLUS borrowers who hold $111.7 billion in outstanding debt.

Depending on someone’s stage of life and financial circumstances, finding new ways to manage this debt might enable them to afford a starter home, trade up, downsize, assist their children with a downpayment, purchase a vacation home or take out a second mortgage for home improvements. But are they likely to approach a mortgage lender for creative ways to handle their debt burdens? In many cases, until recently, the answer was no.

Loyal relationships

The pandemic-induced moratorium on student loan payments, in effect since March 2020, is set to end in September. Mortgage lenders have not always felt the need to get into student lending or refinancing, but that is changing as the demand for mortgage products dwindles. Suddenly, lenders are reconsidering diversification into this additional market, even if they have no experience in it.

Providers of third-party platforms for private student loan origination or refinancing are making this a more practical revenue-generating opportunity. For example, some providers are partnering with investors who want to hold the loans, which opens the door to nondepository institutions for the first time.

The credentials of borrowers who qualify for private student loans, in particular, are attractive to many lenders and investors. These college- educated borrowers typically demonstrate strong credit quality (a 750 FICO score is commonplace) and very good repayment records.

Offering these student loan products can help lenders develop loyal, “sticky” relationships with young borrowers who aren’t yet ready to be homeowners but someday will be. Research indicates that those who continue their education beyond high school will earn at least $1 million more than their peers over their lifetime. These higher earnings will put them in a better position to eventually become homeowners — and they are more likely to imprint with the lenders that made the additional earnings possible.

Proactive steps

Of course, life happens, and some lenders are bound to see more delinquencies or declines in credit quality as a result of the pandemic — impeding a borrower’s ability to repay their loans just as forbearance goes away. Whether these borrowers experienced long COVID or had to support other family members during tough times, this era was often unforgiving.

Lenders can either kick the can down the road on this issue or take proactive steps to keep these borrowers in their homes — and their mortgage loans performing. One of these steps is to offer creative student loan refinancing solutions.

And speaking of the pandemic fallout, three major federal student loan servicers resigned their roles during the health crisis. For originators, this represents an opportunity to swoop in, offer help to affected student loan borrowers by coming up with new financing arrangements, and then either hold them or hand them off to an investor.

Outside assistance

How can lenders without student lending or refinancing experience seize this new opportunity? They and their originators should assess their current client base and those they want to target. If lenders are seeking to support and attract young homebuyers, student lending and refinancing solutions could be a great fit. Conversely, if their current client base includes many Gen Xers with college-age children, a new student lending program might make these borrowers even “stickier” and more profitable.

Outsourcing can be a way to get into this space more quickly. Private-label origination and refinancing platforms, supported behind the scenes by underwriters, automate every aspect of the process — from mobile-friendly applications to origination and disbursement. Lenders should evaluate whether they can truly lean on the companies that offer such technology. Are they comfortable in the driver’s seat and can they help inform a lender’s student borrowing strategy? Do they have a strong background managing regulatory and compliance issues? Will they offer call-center services as well?

Lenders would do well, too, to mirror the processes of younger borrowers who prefer deeper online research. They might choose to enhance their front-end content with how-to guidance, FAQs, and deep, easily searchable resources so that potential clients stay on their site from start to finish — increasing the chances that they will complete their applications.

Mortgage lenders and originators can also work with existing students. Think about new ways to save the day for lower-income borrowers. Some students are of such humble means that the cost of unexpected laptop repairs, or a $1,000 tuition increase, could make the difference between dropping out or graduating — even if they already have federal or private loans.

Student lending platforms can integrate additional microloan services within them — with the objective of keeping these borrowers on course despite the obstacles. Additional services that help undergraduates consolidate their student and personal debt (to pay off health care bills and auto loans, for example) can also wind up being valuable in terms of future mortgage origination opportunities.

● ● ●

The perfect storm of high home valuations, an inventory shortage and interest rates that have more than doubled compared to historic lows have put the American dream of homeownership out of reach for many. Access to that dream is in the hands of mortgage lenders, and they can make it more achievable by supporting student loan borrowers. ●

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#7 Dustin Rosenberg, Convoy Home Loans

2022 Production Numbers

Closed Loans: 262 / Total Volume: $216.8 million

At only 33, Dustin Rosenberg is principal and CEO of Convoy Home Loans, which he runs with his business partner, Jonathan Yoo. They worked together at another lending company and saw an opportunity to establish themselves in a niche that has become quite popular: nonqualified mortgages.

Rosenberg’s previous job was all conventional loans, but he had clients coming in who wanted to purchase investment properties. That’s difficult with conventional programs, so when Rosenberg started Convoy, he knew he wanted to focus on luxury and investment properties. Getting into the non-QM business early served him well, as he was able to establish relationships with realty companies and private partners to purchase his loans before the market turned in 2022.

“You’re going to get different pricing from one broker to another because the relationship with the investor or private fund might be better,” Rosenberg said.

Working with real estate investors, he said, can lead to many more deals than a conventional transaction. “You make one relationship with one investor, and you might be able to do 10 or 12 loans with them in one year,” Rosenberg said. “It’s a completely different ballgame that you’re playing. Really use that book of business and let it work for you.”

#39 Jonathan Kulak, Trident Home Loans LLC

2022 Production Numbers

Closed Loans: 239 / Total Volume: $112.5 million

Before Jonathan Kulak became an originator at Trident Home Loans, he was a client. As an active-duty Air Force pilot, he purchased a home, coming away “super impressed and blown away” by the deal and the customer service he’d received. He started referring business to the company, and the owner, Marty Medve, asked Kulak if he’d ever considered a career in mortgages.

Medve mentored Kulak behind the scenes for the next couple of years, and when Kulak transitioned away from active duty, he participated in the military’s SkillBridge program, where he was able to work at Trident and continue to learn from Medve. He became an originator, built a business through word-of-mouth referrals, and the rest is history.

Kulak said he gets a lot of repeat business as active-duty military move around frequently or transition to civilian life. His company, he said, prioritizes saving money for clients and closing quickly so people moving will have somewhere to land.

“I think about it as a flight I’m taking,” Kulak said. “You plan your path, but you don’t know exactly what variables you’ll get once you take off. You’re going to have to make some real-time decisions. But one of the most critical things to a smooth landing is getting set up as far in advance as you can. Be prepared, because life’s always going to throw you a curveball.”

#67 Gina Allman, Ent Credit Union

2022 Production Numbers

Closed Loans: 230 / Total Volume: $86.9 million

With 20 years of banking experience under her belt, Gina Allman may be one of the most experienced Top Emerging Stars. She started at her current company, Ent Credit Union, as a teller when she was 18. After a few years learning the ropes, she wanted to move into the mortgage department. She was promoted through the ranks, from receptionist to processor to underwriter, eventually becoming an originator about 10 years ago.

“The company I work for is amazing in our community. They’re so supportive. I’ve been super loyal and now I’ve been here almost 21 years. That speaks volumes,” Allman said. “I’m thankful that I have all that experience because as I originate, it helps me know what’s going to work and what’s not going to work.”

Working at a nonprofit credit union lets Allman offer unique benefits to her clients, including in-house processing, underwriting and servicing, lower fees and competitive rates. Allman is also unique in that she tries to attend as many closings as possible.

“Going to the closings has been something I’ve always believed in, that I’ve done, and it gives you an opportunity to have face to face with both the buyer’s agent and the listing agent,” she said. “Since we’re local, we only lend in the state of Colorado, I am able to be present and available. I think the agents have learned that their loan’s going to close with me. They trust me.”

#77 Shireen Shackelford, CrossCountry Mortgage

2022 Production Numbers

Closed Loans: 372 / Total Volume: $82.8 million

Shireen Shackelford built her business brick by brick. When she started in the mortgage business in 2007, she worked 12- to 14-hour days, selling refinances and subprime loans. She built a group under her and managed her own call center. And when she made the decision to transition to purchase lending, she took her core people with her and began to build even further.

“I really took that same grind, that mentality of hustle, and just applied it to the purchase world,” Shackelford said. “I just transferred where the hustle was. I put all my time and energy into meeting as many agents as possible. Anyone that gave me a chance, I would handle with white-glove treatment.”

Shackelford has built a wide range of product knowledge that she’s continuously expanding, and she likes to say that every single buyer has a home with her team. She offers conventional and government loans programs, downpayment assistance and, more recently, non-QM products as well. She’s licensed in 14 states but keeps a majority of business close to home in Ohio.

“I think what keeps me going every day is doing something different,” Shackelford said. “Nothing is ever just easy and straight W-2 income. Working the guidelines and system to where we can make people’s scenarios make sense is the most special thing.”

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More than half of these respondents think that it will be harder for them to get raises, promotions or new jobs in the next few years. Half also expect that starting a family will become even more difficult, if not impossible. Many already live with family members or children in multigenerational housing.

With the millennial and Gen Z segments reporting pessimistic feelings about the economic future of the country, it’s more important than ever to reach out to them with information and encouragement about the homebuying process. Home equity is one of the most important building blocks for wealth in America, and with more members of these younger generations in homes where they can build their families and lives, their economic outlook may improve.

Enter a small army of millennial and Gen Z mortgage originators who are here to help their peers find a path forward to homeownership. Many mortgage industry leaders believe that the key to lending inclusively is to hire originators who can relate to their clients, and this month’s Scotsman Guide rankings section is evidence that they’re on their way to achieving that.

Welcome to the second annual Top Emerging Stars rankings. In its sophomore year, this ranking that highlights standout originators under the age of 40 has more than tripled in size. Last year, the publication listed only the top 100 producers by dollar volume. This year, we’re highlighting every young originator who submitted to the Top Originators rankings and did at least $40 million in business in 2022. To see the complete list of 372 Top Emerging Stars, click the button below.

Tim Potempa of OneTrust Home Loans took the top spot by originating $438.9 million across nearly 1,000 loans last year. Second place went to Danny Meier of Academy Mortgage Corp., who originated $408 million across 581 loans.

The rest of the top-five emerging stars include David J. Edmondson of TD Bank ($302.8 million), Amit Sakhrani of TransUnited Financial Services Inc. ($260.9 million) and Hanh Dao of Next Door Lending ($258 million). Sakhrani, a California-based broker who started his sales career in a Christmas tree lot, is this month’s Featured Top Originator. Read more about him here.

We handpicked four of this year’s Top Emerging Stars for interviews, where we learned more about their careers and where they’re headed. To read their stories, click here or use the button below.

Congratulations to all of the Top Emerging Stars — buckle in for the long careers ahead of you. We hope to see you in many rankings to come. And as always, thank you for reading.

Young generations see positive change along with concern for future

This year’s iteration of the massive Gen Z and Millennial Survey from Deloitte found that while the past few years have brought some positive changes to their lives, young people are still concerned for their futures. The 2023 survey polled more than 22,000 young people in 44 countries.

The survey found that satisfaction at work has improved for these generations. Respondents reported higher satisfaction with their work-life balance, partially due to the rise in remote work. Respondents were also happy with employer progress on environmental sustainability efforts, as well as work tied to diversity, equity and inclusion. Still, less than half of respondents believed that business has an overall positive impact on society.

The survey respondents were economically wary, with the high cost of living ranked as their No. 1 societal concern. Half reported living paycheck to paycheck and expressed worry about the impact of a potential recession on their ability to improve their personal financial situation. They’re reportedly reacting to these pressures by postponing big life decisions such as buying a home or starting a family. They’re also becoming more likely to take on second jobs, or to adopt money- and planet-saving behaviors like shopping secondhand or not driving a car.

Small towns and cities are best for first-time buyers

Ten small cities and towns — including three in the state of New York — topped Realtor.com’s list of the best markets for first-time homebuyers in 2023. Portsmouth, Virginia; DeForest, Wisconsin; and Windsor Locks, Connecticut, took the top three spots. Each of these cities are suburbs of larger metropolitan areas (Virginia Beach, Madison and Hartford, respectively).

Realtor.com based its ranking on a list of criteria that included the share of residents between the ages of 25 to 34, the availability of homes for sale, job opportunities, commute times and local amenities. The ranking also took into account forecast home price growth and current affordability of homes, which was estimated using the incomes of the 25- to 34-year-old population in these cities.

The other cities that earned spots in the top 10 were Gloucester City, New Jersey; Moore, Oklahoma; Magna, Utah; the New York cities of Eggertsville, Watervliet and Mattydale; and Somersworth, New Hampshire.

Top Emerging Stars Methodology

Nominations for Top Emerging Stars were made during the Top Originators submission period from Jan. 1-31, 2023. Originators who submitted individually could choose to nominate themselves by entering their age on the submission form. Companies that submitted originators in bulk had the option to nominate any or all of their originators under the age of 40.

Top Emerging Stars nominations will open again in January 2023 as part of the next Top Originators submission period.

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It’s uncommon for a commercial mortgage company or private equity operation — or any financial institution, for that matter — to make an attempt at constructing a social media presence. Sure, these companies have websites where you can learn about them, but they tend to have a limited presence on the various forms of social media, such as Instagram or Twitter, nor do they typically offer an app.

There are exceptions to this, of course, including real estate titan Blackstone, which has a robust social media presence. The company’s Instagram site offers everything from president Jon Gray explaining quarterly financial results to a visit from The Good Dog Foundation, which provides therapy dogs for various social services.

Fintech companies that deal directly with the public tend to be better plugged into the social media universe, with many institutions possessing social media brand identities with unique perspectives. A few noteworthy names include Klarna, the Swedish-based online shopping site, and Fundrise, the online real estate crowdfunding platform. These businesses have marketed themselves as tech companies that are growing their presence and profits through digital brands and social identities.

Digital opportunities

In this digitally obsessive age, it is important for a financial institution to build a social media brand that is not only recognizable among industry cliques and partners but also by the public. Appealing to digitally savvy millennials and members of Generation Z through social media should be part of any brand strategy in today’s world.

Showcasing a brand’s personality on Instagram allows potential clients to meet a commercial mortgage broker organically and discover their brand holistically before deciding to transact. Consumer product companies are striving to meet the consumer where it is most convenient for them. It is apparent that such reasoning is also behind the content on Blackstone’s social media accounts, for example.

This type of digital exposure only makes sense. If someone is looking to invest in a home, would they not cross-reference the Realtor, the contractor or the interior designer they plan to hire? Millennials are coming of age to spend and invest significantly. To reach this audience, even companies that don’t specialize in consumer goods should start thinking about their digital marketing strategies and customer funnel, which is the visualization of the steps a person takes from becoming aware of a product or service to becoming a paying customer.

Social media platforms have created a variety of opportunities for anyone in the real estate and mortgage industries, including loan originators, to connect with their audiences and build brand recognition. Moreover, social media has become an essential tool for brands to express their points of view and connect with others on a global scale.

A successful Instagram presence highlights the potential for all businesses to leverage social media and reach larger audiences in new markets. By combining stunning imagery, a strong brand aesthetic, unique copy and financial expertise, it is possible to establish your institution as a leading player in the commercial mortgage industry while also gaining recognition among everyday social media users.

Follow the leaders

Commercial mortgage companies can find inspiration from many other industries and disciplines. To attract a wider audience, they can look at successful leaders in industries such as sports, technology, medicine, fashion and retail to identify the common qualities that make them successful.

These qualities can be distilled into a set of principles or values that can be applied across different contexts and fields. For example, successful sports leaders often display qualities such as resilience, determination and teamwork. These can be translated into broad concepts such as grit, perseverance and collaboration in the world of finance.

Similarly, successful business leaders often exhibit traits such as innovation, agility and adaptability, which can be translated into principles such as creativity, flexibility and experimentation. By extracting these underlying principles and values, commercial mortgage companies can create messaging and content that resonates with an expanded audience, even if these people may not be directly interested in the organization’s core product or service.

Instagram can be more than pretty pictures and entertaining videos. As the world becomes increasingly connected, people are looking for new ways to improve themselves and learn new skills. By featuring general industry information, financial terminology, case studies and more, mortgage brokers can create an engaging and informative platform that appeals not only to financial companies but also to students and aspiring professionals, which can be critical to the recruiting process.

Learning experience

Educational content serves as a valuable resource for individuals looking to learn more about the mortgage industry and how it works. Guides and case studies help demystify complex financial concepts and make them more accessible to a wider audience. This content can be both informative and engaging, with visually appealing graphics that help bring it to life.

Lightbox, which provides a variety of data to commercial real estate clients, also offers blogs on everything from understanding the capital markets to the best Instagram accounts in commercial real estate. At the Instagram account for Hines (the global real estate investment, development and management firm), you can follow progress on the newest construction projects and learn about the success of the employee denim clothing drive. Other prominent commercial real estate companies — including Cushman & Wakefield, JLL and Newmark — follow much the same pattern.

Moving forward, social media will continue to shape the way that businesses interact with their clients and referral partners, and how they build their online communities. While there are tangible risks associated with social media, such as the spread of misinformation and the potential for negative feedback, the benefits of using these channels are too great to ignore. As such, it is essential for commercial mortgage companies to embrace social media and develop strategies that effectively leverage an engaged audience with tremendous purchase potential. ●

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But transactions in the consumer housing market are being held back by several factors that people have become familiar with. Inventory remains low by historic standards, buyers need to adjust to interest rates above 5% as the new normal, and sellers need to return to the negotiating table and offer concessions.

The fact is, many consumers are ready to buy and sell, but there is a deficit of at least 5 million homes in the U.S. And while buyers are cautiously waiting to reenter the market, another side of the story is brewing. Single-family home investors are leaning into the market and snatching up opportunities. There are a variety of deals in need of financing that a mortgage originator can take advantage of as investors seek loans in burgeoning markets.

By understanding how current market conditions in the retail housing market are impacting the single-family investor, commercial mortgage brokers can source more leads. A youth movement has created a visible shift in the housing market.

Different playbook

Generation Z and millennial migration patterns have opened up opportunities in the retail and investor housing markets that didn’t exist before. Although affordability is the key driver when purchasing a home, whether the buyer is living in it or renting it out, these younger generations are prioritizing lifestyle and weather when it comes to choosing a location.

Gen Z is expected to make up roughly 30% of the nation’s workforce by 2030 while millennials are continuing to form households and raise families. These two groups are open to living in new cities, including midsized metro areas, that may have been unpopular only a few years ago. They will choose jobs and homes in neighborhoods that meet their budgetary needs or focus on remote work that offers location flexibility.

Younger investors are using a different playbook than the typical 50- to 60-year-old investor. They’re interested in buying properties with the intent to fix them up and rent them out, both as a hedge against inflation and as an opportunity to work for themselves. They’re open to new ideas, looking beyond their own backyard and have a lot of time to experiment with wealth management strategies.

According to a recent New Western survey of nearly 900 real estate investors, 7% of respondents who have already purchased an investment property are 18 to 29 years old. And 15% of the respondents who are looking to invest for the first time in 2023 are in the same age bracket. These buyers will need financing options for both their primary home and investment properties.

This youth movement has contributed significantly to migration and has created affordable investor options in smaller markets. New Western’s survey found that investors under the age of 30 are buying most frequently in midsized metros and college towns that are less expensive, such as Columbus, Ohio; Madison, Wisconsin; Fargo, North Dakota; Missoula, Montana; and Lincoln, Nebraska. And these investors aren’t only relocating and staying in place. They’re buying and holding to rent out a home in more than one location.

Market dynamics

Investors with local expertise are finding deals that didn’t exist before. The frenetic market activity of 2020 and 2021 made it difficult for investors to not only get offers accepted but to even find a property to purchase. With a glut of prospective buyers in the market and sellers expecting offers that exceeded their asking price, investors often stayed on the sidelines because the financial math didn’t make sense.

Soon after, institutional investors (those who own hundreds or thousands of homes) increased their market activity by identifying communities where they could purchase and profit on a large scale. As interest rates rose last year, however, these companies pulled back as they found it difficult to service new debt.

The housing market shifted across the country. Higher mortgage rates led to a retreat among buyers of all types. Companies like Opendoor, Zillow and Offerpad stopped buying homes and, in fact, ended up with inventory they needed to sell — often at a loss. In turn, this opened a new door.

Enter the solopreneur: Mom-and-pop businesses and individual investors walked through this door and began to capture deals. According to New Western’s survey, this trend should continue in the near term as 70% of respondents plan to invest in 2023 while 63% of investors who plan to purchase for the first time felt that interest rates are not too high.

Small investors who leverage their local know-how and nimble operations have a home-field advantage when it comes to finding opportunities in their neighborhoods. They have the skills to take outdated homes in cities across the country and renovate them. If they aren’t planning to hold an asset as a long-term investment, they’ll put it back on the market and provide inventory in undersupplied areas.

Rehab renaissance

When investors buy and rehab these unwanted homes, they resell for 31% less than homes sold via retail in the same market, according to a New Western analysis of Redfin data. Investors have already put more affordable housing options on the market in pandemic-era boom towns like Raleigh, Austin, Nashville and Phoenix by finding homes in need of significant renovations.

Another factor driving the investment-property market is the arrival of the “Great Renovation.” According to the National Association of Home Builders, 75% of U.S. homes were built before 2000 and 35% were built before 1970. In the coming years, even more homes will hit the predictable age in their life cycle when items such as roofs, foundations, plumbing, electrical systems, and heating and cooling systems must be replaced. And that is a point when a homeowner might want to cash in the equity they’ve built over many years rather than put in the time, effort and expense of renovating.

The good news is, there is continued activity in the housing market, regardless of what some mainstream headlines say. Investors are proactively looking for deals and discovering all of the ways they can finance them.

These investors need guidance and information about current loan offerings and strategies. A mortgage broker is a crucial partner at this stage of the investor’s journey, and they can educate novice and veteran investors alike. By providing tools that make clients successful, brokers will develop a relationship that leads to repeat business down the road. ●

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