People born in the ‘80s and early ‘90s are the leading age group when it comes to purchasing homes. As a generation that was raised on modern technology, Millennials are changing the housing market from its core.
Despite the current changes in the economy and the housing market, Millennials are still buying houses. The homeownership rate amongst people in the late 20s and early 30s is around four times higher compared to all other age groups in the past five years. Older Millennials are finally getting rid of their student loan debts, while the younger ones are still mostly renting, but as they’re growing older they are moving towards home ownership as well. Millennials are changing the housing market as they are buying, as they are approaching the process in a unique and different way. Here’s how.
1. Millennials Are Tech-Oriented
Millennials are a generation dedicated to modern technology. For them, internet and online places play a huge role in the homebuying process. According to NAR reports, 99% of Millennials go online to find the right property. Also, they are commonly using their mobile devices, such as tablets and smartphones. All of this is important to consider when approaching your business plan. Today, online presence is one of the most important things any company has. Millennials are changing the housing market in such way that keeping up with the technology has become a necessity.
2. Communication is Electronic
Unlike previous generations, Millennials prefer to communicate via text message or online. Phone calls are rare, except on rare occasions. Texting is the main source of communication and real estate agents and investors have to follow up. Another common source of communication is email, and around 94% people use this as a primary way of conversation.
3. Online Listings
As Millennials are so oriented towards technology, the way houses are listed also had to adapt. This means that listings are now mostly online. Not only that, but traditional open houses have become a rarity, especially during the Coronavirus outbreak. The viewings are being organized via video chats or video presentations. Live streaming is becoming more and more popular, as buyers can see the location with their own eyes, from the comfort of their own home. Also, it is in line with the COVID-19 precaution measures.
4. Different Housing Demand
Unlike older generations, Millennials are picky. They don’t want just any home, they want THE home. Starter homes are losing in popularity, as Millennials are going straight towards the deluxe homes. In fact, one-third of Millennials have bought homes that cost $300,000 or more during the 2018. This is a huge difference compared to previous years, when they’ve spent half of that budget.
At the same time, suburbs are more popular than center of the city. The first reason behind this is the rent price. Millennials have been renting for years, and the rental prices have gone up in the past few years, especially near the city center. This is why they are already aware that living in the city is expensive. The second reason is the Covid-19 pandemic, which has shown how living in crowded places can be dangerous. As a result, we have many cost-conscious Millennials fearing for their health, looking to purchase luxurious properties in more rural areas.
5. Millennials Have a Bigger Income
Millennials want expensive properties, so they will wait longer until they are ready to afford them. They are a bit older than previous generations in the moment of purchase, but they want a property they can stay in for years to come. This may be considered unusual, as on average Millennials are earning less on average compared to their parents. However, in the latest years, their incomes have been slowly increasing, especially in professional sectors. As they’ve worked so hard for a longer time, Millennials don’t want to have to deal with a fixer-upper; they want a home they can move in right away.
Millennials are changing the housing market from the core. As the time passes, these changes will only increase. Their whole world is focused around modern technology and the generation of tech-savvy people is looking for the market that can follow the trends. This may seem uncomfortable to some, but the reality is that the sellers have to adapt.
These changes have positive sides, and it’s important to focus on them. Millennials are prepared to give more money for their dream home compared to previous generations. Also, going online can help create a safer, more efficient market, as well as the homebuying process. At the same time, as Millennials are moving to the suburbs, this could end with more balanced prices in the future. The new market that will be born doesn’t have to be a bad one, simply a different one, and everyone could profit from it if we are flexible.