How Millennials Are Changing Today's Housing Market
In today's unique economic environment, millennials are taking an entirely new approach to homeownership. As the folks in their late 20s and early 30s close out their student debts and settle into their careers, buying residential real estate is often the next big thing on the horizon.
With around 38 percent of today's home buyers being millenials, according to the National Association of Realtors, this generation is actively changing the housing market as a whole.
A Research-Driven Approach to Home Buying
It's no secret that millennials are lauded as the generation that will happily spend $200 on a pair of jeans, only after trying 70-some-odd pairs to make sure that it's the perfect one. And the way that they approach house hunting is no different.
Millennials actively rely on the web and their mobile devices to get the information they need about the homes they're considering. And as a consequence, they are making more educated, research-driven decisions when it comes to homeownership.
However, this is also having an effect on the role of real estate agents and brokers in the home-buying process. Where previous generations relied on realtors for their know-how and wealth of information, in today's world real estate agents are more sought after for their negotiation, marketing and relationship-building skills.
Colby Short, co-founder and CEO of real estate agent comparison site GetAgent, confirms this, saying, "We're finding a real enthusiasm for information about agents' skills. Things like how quickly an agent sells homes and how good their valuations are. It's not just about putting up a 'For Sale' sign and waiting for an offer to come along anymore."
The Shift in Communication With Realtors
Alongside a largely digitalized take on house hunting, millennials are also shifting the norms when it comes to communicating with various real estate professionals.
This generation leans far more toward communicating via digital means, whether it be text, WhatsApp or even Facebook Messenger. Face-to-face appointments and phone calls are generally reserved for emergencies and urgent matters. In contrast, setting up appointments, asking questions and expressing interest in a particular property are now mostly done over a quick chat.
In addition to this, millennials are also influencing the way real estate agents list homes for sale. Where in the past, an informative summary and a few well-shot photos would have made the cut, today's generation is pushing realtors to include virtual tours, videos and a wealth of additional marketing collateral with their listings.
What Sort of Property Are Millennials After?
Just like every generation preceding them, many millennials are eager to buy a home. However, research suggests that this generation doesn't just want any home — they want the perfect one. As such, they aren't afraid to delay buying their first piece of real estate in potentially less favorable conditions in order to secure something bigger and better. In 2018, more than 30 percent of millennials who entered the housing market closed a deal in the $300,000 range, which is significantly higher than the $150,000 to $200,000 average most Americans spend on their first property.
Adding to that, millennials are also preferring to settle in the 'burbs, with nearly 47 percent of millennial home buyers preferring the suburbs to central and more rural areas, according to Zillow. This is largely attributed to the active modernization efforts under way in key urban areas across the nation. While these initiatives create a more vibrant and livable urban core, luxe pricing for central and even semi-central housing is one of the consequences that's pushing cost-conscious millenials to look for their ideal property further out of the city centers.
The Impact of Rising Incomes and Cost-Consciousness
Arguably, millennials have it harder than most preceding generations when it comes to buying their first home. With skyrocketing real estate prices in a relatively low-interest environment, it's not a stretch to say that the barrier to entry is pretty high.
That's why many millenials are more content with renting longer among several roommates to bring down the cost or living with their parents into their late 20s in order to settle initial debts, such as student loans, quicker.
However, it's also important to note that millennial incomes are increasing rapidly. And with most professional sector employees earning an early career average of $26.05, this generation is positioned to afford larger and more luxurious homes instead of the typical first-time "fixer-upper."
In addition, move-in-ready properties are growing in popularity. With a higher financial capability and a growing desire for a hassle-free process, many millenials are willing to pay a premium for simplicity.
With each and every generation entering the housing market, there are significant changes to be observed that lay down the groundwork for the future. From technological advancements that provide for a more efficient, informative and streamlined home-buying process to improving financial abilities and a money-conscious mindset, there are quite a few positive ways in which the millenial generation is changing today's housing market.
All in all, millennials are opting to take it slow, save up and improve their financial situation in favor of rushing into the housing market to buy anything they can get their hands on. This means they spend a lot more time picking out the perfect property and generally end up buying something bigger and better with the intention to live there for a lifetime.
These behaviors and trends are actively shaping today's housing market, and companies in the sector will need to tap into these insights to adapt and capitalize on this generation's home purchasing power.