Making homebuyers’ dreams a reality is the goal of every great lender, and in the past few years, how that goal is achieved has changed—influenced by laws, technology and an emerging homebuyer demographic. This is where many articles go down the path of discussing “millennials”, but in the spirit of this month’s issue, we’re here to highlight another trend: female homebuyers. According to the 2017 National Association of Realtors Home Buyer and Seller Generational Trends report, single women are buying more houses than single men today. While the majority of total homebuyers are married couples (66 percent), 17 percent were single females (compared to single men, who comprise seven percent of the total).
So, why are more females buying homes? There’s much speculation and no clear answer (although, we have some ideas). What does it mean for lenders? It’s an exciting and positive change that every lender should pay attention to; it will help them adjust their strategies to fit the shift in buyers, and continue making homeownership a reality for every borrower.
Empowerment and Departure from Tradition
Women today are more empowered than ever before and have a more inherent self-sufficient mindset compared to previous generations. It exceeds well beyond the mortgage industry; there are more female entrepreneurs, professors and working professionals in the workforce and for the first time ever, a female was a primary candidate for the presidency of the United States. And while there’s still much work to be done before we reach true equality, we can’t ignore the progress we’ve made so far. In addition, tradition dictated that marriage preceded a home purchase, but today, there’s a change in that thought process. Analysis of data from the National Survey of Family Growth showed that of women born in the 40s, 25 percent were unmarried by the time they reached the age of 23. Conversely, the share of unmarried 23-year olds born in the 90s is 81 percent. Under this empowerment and departure from tradition lies a fundamental characteristic of women: the desire for stability and security and the tendency to be the familial caretaker. A home defines those characteristics.
As lenders, appealing to homebuyers with a variety of characteristics requires an array of targeted approaches. This isn’t anything new; borrower segmentation has been around and used for a long time and successful lenders know to be responsibly mindful of current borrower dynamics because each one brings a unique mindset to home buying that must be understood and respected. Overall, homebuyers want to understand the process and have the best education available to help create a trusted and enjoyable experience. The difference today is the diversity of the segments. A larger share of female homebuyers means making changes in two key areas:
Appealing to the Female Homebuyer
Lenders must take into consideration how males and females approach a home purchase. Male borrowers have a tendency to prioritize the interest rate – they’re likely to be more analytical and process-driven. Female borrowers on the other hand will relate more to the aesthetics and emotional components of the purchase (security, stability and trust). That isn’t to say that the budget is less important for the female homebuyer, but the conversation and communication leading up to the final decision is going to be different. Each requires a unique approach from a marketing perspective. For example, women tend to trust each other more than traditional advertising and tend to use social media more often than males, specifically Facebook and Instagram. They’re also more likely to follow brands. As a marketing team, this is important to keep in mind. When it comes to the home search, females tend to find the house they like and then look into the budgetary requirements (whereas males prioritize the loan and then the home search). We looked at our own sample of data, and it showed that of total applications, a larger share of men (24.5 percent) get pre-approved before completing the mortgage application compared to females (15.6 percent).
What it really all comes down to is communication and making sure that the borrower is comfortable with the process. If you’re not as intimidated, then you’re more likely to get further along in the process. That is the most important thing in our business and more diversity enables lenders to connect with borrowers in a more natural and easy way. Obviously, this is good for business, but as a whole, it makes the industry more approachable. Consider a business operating in a predominately Spanish-speaking area. Having employees who can communicate has a tremendously positive impact.
Diversifying Your Workforce
In 2001, Ford Motor Marketing reported that women influenced 80 percent of all car purchases and at that time, CNW Research (an automotive marketing research firm) found that “half of new car purchases are made by women, and 53 percent of used car sales can be attributed to women.” The growing female influence changed the automotive industry—in response to the increasing share of female car buyers, repair shots and dealerships began hiring more female technicians and service managers. Not because there was a demand to be treated differently, but because there was a need to adjust to the behavior styles of female customers, to make them feel comfortable when interacting with the sales representatives and mechanics. There was noticeable change in the operations of automotive retailers, with a greater emphasis on cleanliness and appearance, which lead to a better experience for the emerging customer segment. We’ve already established that more single women are buying homes and research from the Harvard Business Review shows that women make the decision in the purchases of 91 percent of homes. It only makes more sense to have mortgage professionals who can connect and relate with female homebuyers and that’s naturally going to be a female loan officer; someone who can simply communicate and share experiences with them and provide insights in a more relatable manner.
Regardless, any lender should seek mortgage professionals with exemplary character, who are caring and competent and who are driven to achieve goals in their everyday approach. It’s also important to strike a balance of the strengths of everyone, whether male or female. Each person has their own unique dynamic and it’s important to consider those dynamics when professionals approach their duties in the mortgage industry.
What this Means for the Industry
We are excited to see this shift in the mortgage industry. A diverse workforce across all levels of the mortgage industry benefits us all. Each person performing to their strengths will make the entire team stronger, which strengthens the organizations from the ground up.
Females bring a different skill set to the trade that is beneficial and the effect this has on borrower service is undeniable. Breaking down the barriers to entry to the industry is critical. Lenders have to help serve and treat everyone with the same excellent service no matter what and every adjustment, big or small, must be made to ensure that borrowers are provided with the best homebuying experience.