According to the U.S. Census Bureau, millennials—numbering 72.1 million people—now represent the largest segment of the adult population in America. They are a powerful and growing demographic in the real estate market with their homeownership rates increasing to 37.6% at the end of last year. Currently between the ages of 24 and 39, millennials are tech-savvy, educated young professionals and operate differently than other generations looking to buy a home.
When it comes to millennials and the real estate market, here are 5 trends to watch:
1. COVID-19 is propelling millennial homeownership
A Morning Consult survey suggests that COVID-19 is pushing millennials toward homeownership. Of millennials who don’t currently own a home, the study found that 28% are now interested in purchasing one as a result of the pandemic. Millennials’ financial priorities are also shifting, and they are prepared to forego expenses to transition from renting to homeownership. One wrinkle is that the prices of single-family homes are outpacing any increase in wages, according to ATTOM Data Solutions, so homeownership is simply less affordable.
2. Millennials want move-in ready homes
According to HousingEconomics.com, 41% of millennials—up from 28% in 2007— prefer new construction. Brand new homes allow millennials to customize, be more involved in the design process, and prioritize sustainability and energy-efficiency. Millennials are Internet-savvy too, so they follow reviews, seek opinions, and will read online ratings about contractors and builders. They price compare and evaluate company mission statements. Zillow describes millennials as undertaking social home searches because the majority of them will turn to a friend, neighbor, or relative for advice before launching into a home search.
3. Millennial homebuyers are burdened by student debt
Millennials have unique financial challenges, including soaring student loan debt, and the 2008 housing collapse that began as many were finishing their degrees. In fact, according to the Harvard Kennedy School Institute of Politics, 79% of millennials view student debt as a problem. As a result, they often look for more modest investments when home buying. Survey data from Clever’s 2020 Millennial Home Buyer Report found that millennials look for homes that are approximately 1,700 square feet. They are less interested in big homes like their parents owned. Instead, millennials want affordable properties so they can stay within their means.
4. Millennials want family-friendly locations
While millennials gravitate towards smaller houses, they still need homes with space—both indoor and out—to raise a family. Before the pandemic, millennials favored dynamic downtown areas with a family-friendly atmosphere. What’s striking about this characteristic of the millennial home-buying population is that millennials were the only age cohort to have it. Housingeconomics.com confirmed in a 2018 survey that millennials were the only demographic compared to Gen X, Boomers and seniors, that preferred Central City to Rural, Outlying Suburb or Close in Suburb. Time will tell if the pandemic has a permanent impact on this preference and whether the current millennial flight from densely populated cities continues. However, walkable, family-friendly communities with great schools, indoor and outdoor spaces, and lots of recreational options will continue to top the list for millennials in search of homes.
5. Millennials play the long game when choosing a home
Unlike their parents before them, millennials plan to stay in their first homes much longer. They will invest in kitchen upgrades and outdoor entertainment spaces so they can enjoy their families. Tech-savvy, millennials want smart homes and often look for features that integrate with their mobile technology. Luxurious decor is not a priority, but smart homes in communities rich in shared amenities most certainly are—playgrounds, community pools, parks, and recreational centers. According to Zillow, more than half of millennials purchase a home in a community with shared amenities.
Whether you are a millennial, Gen X, or Baby Boomer, if you are interested in buying or selling a home in northern New Jersey, I would love to assist you. Contact Victoria Carter at (973) 220-3050 or email firstname.lastname@example.org.