Image by mohamed Hassan from Pixabay
Millennials enter 2020 as the second-largest home-buying demographic and are expected to hold sway over the residential real estate market.
Although Millennials trail Baby Boomers in total population — 71 million to 74.1 million — they have aged into the prime starter and second home years. Millennials are largely considered to be born between 1981 and 1996, placing them out of traditional college years on the younger end of the spectrum. Older millennials are more inclined to be settled into professions and looking to set down roots. Baby Boomers, by contrast, peaked at 78.8 million more than two decades ago. Their 54-72 age bracket means they have generally already purchased homes and are more inclined to be downsizing or settling in with little to no mortgage. In 2019, Millennials were a driving real estate force and are expected to remain the primary movers and shakers.
How Millennials are Changing Real Estate Industry
Over the last six years, Millennials have comprised more than one-third of homebuyers and posted a sizable 36 percent of purchases in 2018. Although these numbers would seem to indicate that Millennials are following similar life patterns as Baby Boomers and others, the economic and cultural landscape has changed their trajectory.
Unlike the Baby Boomer generation, Millennials have been swamped with massive student loan debt. This factor caused more of them to live with parents to pay down debt before pivoting to purchase a starter home. Such economic realities pitted even older Millennials competing with downsizing Baby Boomers over starter homes. That trend is expected to continue into 2020 with the younger side of the demographic now out of college. Real estate professionals can also expect many 20-somethings to put home-buying on hold for the next few years and emerge as first-time buyers as college debt becomes manageable.
Another unique facet of this generation’s home-buying inclinations will likely be the process of selecting and financing a property. Millennials grew up in the technology age and are often quite comfortable shopping for low-interest loans online. According to a National Association of Realtors report, approximately 81 percent of Millennials on the older end of the spectrum found their home through an app in 2019. The use of video walk-throughs and electronic mortgage buys are items real estate professionals and home-sellers may want to consider.
Key Considerations About Millennial Homebuyers
It may seem counterintuitive, given their online leanings, but Millennials have more personalized preferences. Many grew up in a culture of cooperation versus competition and expect a sense of friendly comradery. The notion that buying a home is strictly a business transaction is an almost foreign concept to this generation. Buying a home is a deeply personal life decision.
Along with personal business relations and online resources, real estate professionals and home-sellers would be well served to update starter and family homes with the latest technology. The powerful home-buying generation prefers living spaces that reflect the times. Smart technology and sustainable energy are attractive features. Space for a home office is also a strong selling point as more Millennials are opting to work from home.
Millennial home-buying growth is expected to continue its positive trend and this demographic could account for upwards of 40 percent of the residential market in 2020.