Here's how millennials are shaking up the real estate game
The housing market evolves with every new generation of homebuyers, and the ascension of millennials to the real estate game has proved to be no exception. Young people born in the late 1980s and early 1990s are starting to settle into careers, get married and look for their perfect residences.
But millennials aren't willing to play by the same rules as their parents and grandparents. Today's young adults have their own unique set of challenges, needs and desires, and they're shaking up the housing market.
Millennials poised for real estate takeover
According to Realtor.com's recent study on homebuyers, millennials have already had an impact on the climate of 2017's housing market. The publication found that 52 percent of people shopping for homes at the start of the year were first-time property buyers. Of this group, 61 percent were 35 years old or younger.
The study pointed out that millennials, who came of age during the recession and are often saddled with student loan debt, are extremely budget- and investment-minded when looking at potential residences. With finances in the forefront of their minds, millennials are more willing to shop around and less willing to compromise or take a risk on a house that doesn't meet their needs. And as the generation continues to age, these needs are becoming increasingly family-based: The report cited getting married, moving in with a significant other and having children as millennials' top motivations for purchasing property.
Suburbs remain favorite location among millennial homebuyers
There are many widespread misconceptions about millennials, but perhaps the most incorrect is that this generation universally favors cities over suburbs. A study from Harvard University's Joint Center for Housing Studies discovered that most people believe millennials are attracted to urban life because of walkability and access to businesses, and that they prefer renting to buying because they desire flexibility. In fact, the study found that 50 percent of millennial homebuyers in 2016 purchased suburban property. Additionally, young adults were 5 percent more likely to buy as opposed to rent in cities whose median home prices fell at least 20 percent below the national figure.
Realtor.com's survey revealed that millennials' location preferences aren't actually too different from those of their parents. About 26 percent of Baby Boomers, or people ages 55-64, said they desired residences near suburbs, compared with 28 percent of their younger counterparts. Outlying suburbs were the locale of choice for 22 percent of millennials and 24 percent of baby Boomers. Just 11 percent of young adults indicated that metro areas were their preferred neighborhoods.
Millennials are also surprisingly traditional when it comes to their preferred home styles. Realtor.com reported that 39 percent of young homebuyers are seeking single-family properties, while 34 percent are interested in townhomes. Multi-family homes, whose extra units can be rented out for additional income, are on the wish lists of 15 percent of millennials. Just 10 percent of young buyers are on the market for condominiums and 2 percent are investing in mobile homes.
Bankrate noted that millennials are hesitant to embrace condominiums due to the financial responsibilities that can accompany homeowners' associations. Expensive dues and assessments can drain an already tight monthly budget, and may be out of first-time buyers' price points.
Young buyers prioritize key features when shopping for homes
Millennials have less wiggle room in their budgets, which means they're often not willing to purchase homes that could require expensive adjustments or renovations. Bankrate noted that most young people enter the real estate game with limited savings that they need to use for down payments, furniture and other moving expenses, which means they're not as financially able to take on fixer-uppers as previous generations may have been.
Since bathrooms and kitchens tend to require the most costly updates, millennial homebuyers want these areas to be move-in ready, explained Bankrate. Large, open kitchens are also very popular among the newest generation of real estate, who tend to use them as general entertaining and relaxing spaces. Offices are also at the top of many millennials' lists, as many young professionals are able to take advantage of flexible, work-from-home schedules.
Many millennials are digital natives, which means they grew up immersed in technology and are naturally inclined to embrace and adapt to emerging cutting-edge tools. Tech has already made a splash in the housing sector, and purchasing a tech-friendly home has become a central priority for young buyers. Landline phone jacks are essentially obsolete among millennial house hunters, who rely largely on their smartphones for communication. Strong cell and internet service are non-negotiable home features for most 21-35 year olds.
House hunting starts online
For this tech-savvy generation, the homebuying process typically begins online. In fact, numbers from the National Association of Realtors indicated that logging onto the internet is the first step toward acquiring a property for 94 percent of millennial house hunters. When browsing the web, young buyers are interested in seeing high-quality photos that can give them a better idea of a home's layout, design and overall aesthetic.
Millennials are also vetting homes to see which ones are worth in-person visits. The NRA reported that 76 percent of young adults in 2014 said they drove by properties after seeing them advertised online.
Real Estate News brought to you by 2M Realty, a true expert in the online real estate market