Giving a Leg Up to First-Time Homebuyers

Builders are working with lending agencies to bring first-time buyers into the market


Millions of millennials are postponing the American dream of homeownership. Burdened by skyrocketing home prices and student debt loads, a large segment of the population between the ages of 25 and 37 are unable to afford the down payment on houses across many cities. Homebuilders, mortgage companies, and specialty homeowners’ insurance agencies are hoping to change this situation.

According to a 2018 Urban Institute study, would-be millennial homebuyers are acquiring houses at reduced rates than their parents and grandparents. The primary reasons are the cost of the down payment and anxiety over their ability to pay the monthly mortgage. “If the homeownership rate for millennials had stayed the same as previous generations, there would be about 3.4 million more homeowners today,” the study states.

Cognizant of these challenges, many of the nation’s top homebuilders have responded by developing affordable infill housing developments close to mass transit in suburbs outside major cities. Infill development refers to low-density residential and commercial spaces that are transformed into high-density residential and mixed-use spaces. An example is an under-used suburban strip mall built in the 1970s that is converted into several detached and semi-attached entry-level modern homes at affordable prices.

Since many young people are currently renting in urban neighborhoods and are disinclined to relinquish much-loved amenities like coffee shops, restaurants, and boutiques, homebuilders are creating walkable town centers where people can socialize. The phenomenon even has a name—urban burbs. According to a study by the National Association of Realtors, urban burbs have become a major home ownership trend. Approximately 57 percent of buyers under age 36 bought houses in the suburbs in 2017, compared to the 17 percent that closed on urban homes.

Lending a Hand

The high cost of houses and condominiums in urban centers are the major reason why millennials are interested in relocating to urban burbs. A few years ago, the notion of the proverbial house in the suburbs with a picket fence and two-car garage ran counter to the modern sensibilities of millennials. Having grown up in such environments, many young people had no plans to return. Now in their late-20s through mid-30s, either out of necessity or choice, they are moving back.

What they are not moving back to, at least for the time being, are the homes they grew up in. Aware of millennials’ social preferences, homebuilders are creating affordable urban burbs that comprise the best of both worlds. In choosing these developments, first-time homebuyers can lower the cost of their down payment through a variety of home loan programs and other incentives. For example, several mortgage lenders are offering down payment assistance grants to eligible borrowers, addressing many millennials’ biggest homebuying concern.

Other related expenses can also be lowered. For instance, many homebuilders of urban burbs work with specialty agencies who have access to specialized pre-underwritten new home product with exclusive built-in discounts that result in highly competitive rates their prospective homebuyers can benefit from.

The lower rate may improve the odds of a cash-strapped buyer qualifying for a mortgage. The New Home Consultants and Mortgage Loan Officers also can estimate a potential homebuyer’s total cost of ownership on the spot, comprising annual or monthly mortgage payments, property taxes, and insurance premiums.

Lastly, such specialized agencies can ensure a seamless home closing process. A major challenge for mortgage lenders and homebuilders remains the need for buyers to have a homeowners insurance policy in place prior to the closing (obviously a mortgage lender or homebuilder is not going to risk an uninsured fire or flood loss causing damage to the property). Yet, some homebuyers fail to have proof of insurance at the closing, delaying the closing and creating additional work and anxiety to the mortgage lender, who is responsible for making sure the buyer has acquired the insurance. Specialized agencies focus on new housing communities and provide fast, hassle-free policy issuance because they understand predictable closings and a superior customer experience matter.

All parties to the sale, the homebuilder, mortgage lender, and homebuyer benefit: By working with a new home specialty agency, homebuilders lessen any concerns at the eleventh hour that the closing will not be delayed, mortgage lenders rest assured that homeowners insurance is in place at the closing, and penny-pinching homebuyers have the opportunity to purchase a competitively-priced insurance policy via a very seamless process.

Added up, it’s a win, win, win—and just in time too, as more and more millennials make their way to the urban burbs, realizing their American dream.

Carlota Ciauri is Vice President of Business Development and Agency Communications at Westwood Insurance Agency, a wholly owned subsidiary of QBE. To learn more, visit