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Chrisman's Corner: Lenders Are Watching the Youngsters

There are more people born between 1980 and 1999 – what the Census Bureau defines as Millennials – than any other generation. So their economic clout is obvious. How has the recession affected the job market for Millennials, which in turn impacts their ability to buy a home?

 JMAC Lending Inc’s brokers will be interested to know that according to Wells Fargo Securities, LLC Economics Group, a greater number of young adults are now employed in leisure & hospitality, and retail industries than before the recession. These two industries employ the largest share of Millennial workers and a growing number of young adults are finding employment in these low-paying sectors. About 45% of employees in the retail sector and 60% in the leisure & hospitality sector are Millennials.

 Traditionally, our brokers know that most young adults have found employment in industries that require few skills and more flexible hours. This has held true among the Millennial generation, mainly because of the weak labor market. Millennials have also moved into lower-paying industries at a faster rate than their older counterparts. Conversely, the construction and financial industries have evidenced a decline in the share of young workers and the manufacturing and information industries employ the least amount of young adults.

What does this mean for JMAC Lending Inc’s clients and their Realtor partners? If indeed younger people are filling out the ranks of lower-paying jobs, they tend to have lower incomes, and take longer to save for a down payment. Creative programs may have to be developed, and with them various underwriting policies, in order to encourage first time home buyers who will lead to current home owners being able to move up.

Interestingly, many markets continue to do very well, especially city centers where JMAC Lending Inc lends. At this point Millennials prefer urban areas near mass transit: a local train line is more important than a big garage – and, recent recession or not, there are plenty of developers who will successfully target exactly that.