Characterized as a generation that for years seemed content to rent rather than to own, Millennials have begun to buy homes in larger numbers, but they’re not looking for the same things that other generational buyers find important. Defined as the generation that was born between 1980 and the early 2000’s, many remained “at home” with their parents into their late 20’s, and were burdened by college debt and a less than stellar job market. They delayed marriage and the trappings of traditional life for a far longer span of time than their Gen X predecessors and seemed to reject the suburban choices and lifestyle preferences of their parents.
But that is now changing, at least in part, according to real estate records and recent news reports.
Why the Change?
According to an article published in Forbes March 3, 2016, younger Millennials still feel the economic pinch and are are perfectly happy renting. Or, even if not happy, they feel no need to load up on further debt, even in the form of a home mortgage.
But if they do choose to buy, it is not likely to be in high-priced neighborhoods. These savvy buyers, even if they enjoy well-paying employment, seem to have opted out of high priced cities on both coasts and in such notoriously expensive cities as San Francisco, Miami and Boston. Then, too, there is there disenchantment with the status quo, their desire to make the world a better place, and their idealism. They are happy with smaller homes, they feel no need to embrace outward status symbols or to flaunt their affluence. They like local, fresh, natural and comfortable, as much in their choice of living space as in their foods, and they embrace green and sustainable in all areas of life.
It’s a shift from the past, to be sure, and one borne out by statistics from the National Association of Realtors (NAR), compiled just one year ago.
It may be that the Millennial age, in home buying terms, has arrived. According to the NAR, buyers aged 34 or younger comprised 32 and 31% of all home buyers in 2014 and 2013, respectively. Home purchases by Baby Boomers just about equaled those of Millennials, with Generation X buyers in third with a 27% share. Finally, buyers over the age of 69 (termed the Silent Generation) accounted for 10% of sales.
The most interesting thing about the study may well be that Millennials and Gen X buyers overwhelmingly believe that home ownership is a good investment, even though they may have delayed their entry into the market while waiting to build up cash reserves. If they now feel more comfortable taking on long-term debt due to more job stability and still-low interest rates, that could signal a bright future for real estate, according to the analysts.
What do Millennials Want?
There are some identifiable differences in Millennial buying patterns. Those emerging preferences conform to the general concerns of this age group that is, in many ways, more community oriented and more interested in global sustainability that previous generations of home buyers. Concerns with energy efficiency, a rebellion against wastefulness, depletion of resources, ostentation and conspicuous consumption, as well as a sense of social consciousness and an orientation toward natural environments and holistic living are all characteristics of this generation.
These younger adults also have been notably resistant to settling down (or settling) in the job market. They are sometimes criticized for a lack of loyalty, but most Millennials are averse to compromising their own set of values simply for security. Even if the face of a less than robust economy, Many of this generation will often hold out for their idea of “what a job ought to be” rather than adjusting their beliefs to conform to “what is.” They are happiest working for startups or smaller corporations where they feel they can contribute to growth and make a real difference.
They are also heading for the heartland to live — or maybe not heading there, but if they find themselves in cities like Denver, St. Louis, Cedar Rapids or Des Moines in Iowa, or in Utah, they are likely to buy — where they find where they find better value in housing and where they can be a part of smaller, more personable communities. They are also likely to buy into neighborhoods rather than opting for sprawling suburbs with more conveniences; or they will choose live-work options that allow them to walk or bicycle to work rather than using their cars.
The share of first-time home buyers has fallen to a low point, but is expected to rise again as individuals age slightly and their job security improves. They cite wanting to own a home as a primary reason to buy, and there is an upsurge in the number of unmarried couples purchasing a home together. As with other generations, the birth of a child typically spurs the search for a home of their own, and the desire to be “on their own” rather than sharing a home with parents is seen as a serious motivation to buy.
When they are ready, nearly all Millennials begin their search for a new home online, and are apt to be very knowledgeable about neighborhoods, housing availability, pricing, home loans and additional real estate topics prior to contacting a real estate agent. They are also likely to be cautious before making offers and thoughtful about their choices. They are looking for good deals, but they are also looking for quality of life.
2 Point Highlight
The most interesting thing about the study may well be that Millennials and Gen X buyers overwhelmingly believe that home ownership is a good investment, even though they may have delayed their entry into the market while waiting to build up cash reserves.
They are also heading for the heartland to live — or maybe not heading there, but if they find themselves in cities like Denver, St. Louis, Cedar Rapids or Des Moines in Iowa, or in Utah, they are likely to buy — where they find where they find better value in housing and where they can be a part of smaller, more personable communities.
