A disconnect with millennial buyers means the industry will have to tighten its belt or adapt quickly, said Robert Pieklo, senior vice president of secondary marketing for American Financial Resources.
“There’s trouble ahead no matter what. Cash is king here, and margins are still being compressed,” Pieklo said. “That’s sort of why we’ve saved up our acorns. Outside of some elevated servicing values, the market is tight. You’re going to see some consolidation, and you’re going to see some balance sheets that are running really thin on cash.”
Recent stutters in the housing industry and a continuing trouble courting younger buyers mean the purchase market may tighten, Pieklo said.
“America runs on housing, and if housing starts to stall a little bit more like we’ve seen in the latest indicators, that could be a huge blow to the economy,” he said. “On the millennial side in the purchase market, you have this huge generational disconnect. The average age of a realtor is 57. The average age of a mortgage guy isn’t too far below that. There’s a huge generational disconnect, because what 20-something or 30-year-old guy is going to listen to his mother-in-law?”
AFR is attempting to bridge that gap by actively recruiting millennials, Pieklo said.
“We need new people to enter our field. The industry is lagging as far as new entrants into the field,” he said. “You go to these conferences and it’s getting grayer and grayer. It’s the same guard going through, and it’s very hard to connect with a 27-year-old a few years out of college. It’s a recruiting tactic for us to get the college grads in to learn the industry from the back forward. Not just origination, but the secondary market as well.”
But recruiting young people isn’t going to bridge the gap itself, Pieklo said. Right now there simply aren’t a lot of houses on the market that appeal to millennials.
“It’s also about getting the builders – the people looking to build the next level of homes – to build what the millennials want,” Pieklo said. “What’s being built now isn’t what millennials want. They want a more urbanized environment, and they want something smaller, more efficient, more green. And that’s something that’s just not occurring. We need to get everybody on board. There’s obviously more to it … but this generational disconnect, and people not selling what others want to buy, is a problem that has to be solved first.”
There are tighter times ahead for the mortgage space, according to one industry pro. And one of the biggest problems the industry faces is the inability to court younger buyers.