Millennials and Homebuying
The National Association of Realtors recently found that millennials make up the biggest share of homebuyers at 32 percent and now make up 68 percent of first-time homebuyers.
The percentages keep growing and many are looking to buy their first home over the next two years.
As Nela Richardson, the chief economist for Redfin, stated in a recent Forbes interview, “millennials will have a huge impact on the housing market for the next decade, just because of demographics alone.”
“Whatever a few of them do, there’s enough of them that they’ll make a big impact.”
So what are millennials buying?
Location, Location, Location
Many millennials are buying condos in the center of cities.
The main goal is to be close to work and live in walkable neighborhood with bars and coffee shops.
It’s a shorter term investment as millennials don’t stay in the same job for 40 years like other generations.
According to the National Association of Realtors, commuting costs were more important to millennials than the costs of heating and cooling their purchased home.
Convenience to their job was the biggest factor influencing millennial buyers’ choice by over 60%.
Millennials are purchasing newer homes to avoid the need for immediate renovations, plumbing or electrical repairs.
Young homebuyers work long hours and have lots of interest outside of the home, so a home that requires minimal time, care and money is key.
Energy Efficiency and Green Technology
Millennials’ like smart, energy-efficient homes with an open outdoor space.
The generation is extremely conscientious of their environmental impact and embrace Energy Star appliances, sustainable building materials, and energy-efficient LED lighting.
According to Kevin Hofmann, Home Depot’s CMO, “they are more inclined to invest in smart or energy-efficient technologies.”
They research and understand Low Flow Technology and embrace organizations like Watersense and CAL Green.
Millennial homebuyers also love the idea of a smart home.
This technologically-advanced generation loves integrated home features that allow them to answer their doors and lower their heating & cooling all from an app on their smartphones.
Telecommuting millennials want a home with work space.
Given their comfort with digital technology millennials work anytime and anywhere.
As the generation becomes the majority, we can expect flex time and telecommuting to become a common workplace practice rather than a special privilege.
In fact, by around 2030, the millennial majority will likely have done away with the 9-to-5 workday entirely.
They also expect a broader array of choices. For example, five styles of granite used to be sufficient, but now Home Depot offers 30 types.
It isn’t just about assortment, Hofmann said to CNBC.
Millennials prefer retailers who can quickly highlight for them the most trendy faucets.
Size isn’t everything
Size was the second biggest compromise millennial homebuyers made in 2015.
The bigger the home the bigger the price tag
Affordability is a key factor for space.
Millennials would rather have an updated home in a great neighborhood than square footage.
A common misconception is that millennials want their new homes as contemporary as their technology.
A millennial study by John Burns Consulting found that “Modern Traditional” is the most preferred design style of millennials, followed by “Style on a Budget”, “Casual Organic” and “Modern”.
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