We define “millennials” as a lifestyle choice and not just as a simple age bracket. But what about the actual millennial generation that is taking over the real estate market these days? Much is made of the home-buying habits and attitudes of the millennials, which has become the largest generation with the most purchasing power in the United States. Can millennials afford homes? Do they even want to own homes?
Survey data show that most millennials DO aspire to become homeowners. There are some obstacles to homeownership for millennials that previous generations didn’t have to face, and fewer millennials own homes than preceding generations did at the same age.
Still, those born between 1981 and 1996 represent a huge percentage of the population and possess significant buying power. If you’re selling a home, it might seem prudent to pay attention to them. Here are some things millennial homebuyers want in a home.
Affordability is the King
With student loan debt hampering loan qualifications and the ability to save for a down payment, affordability is perhaps the biggest problem millennials encounter on their path to homeownership. What does this mean for sellers? It means that if you have a home that’s more of a “starter” home than a higher-end property, you will likely attract interest from millennials. That can affect how you market your home and prepare it for sale.
What Millennial Homebuyers Want in a Home
by Dino Alexander, Principal Broker, Alexander Maxwell Realty
Promoting a home as affordable will appeal to millennials. When you’re getting it ready to go on the market, focusing on updates and modernization – without adding a ton of cost – can go a long way with younger buyers.
No projects, please
While there will always be a group of buyers looking for a “fixer-upper,” millennials seem not to fit into that group. According to the National Association of Realtors’ “Homebuyers and Sellers Generational Report,” millennials are by far the generation most likely to buy new homes simply to avoid making renovations. In fact, not having to do repairs or improvements to a home is the No. 1 reason millennials consider purchasing new construction instead of an existing home.
Sellers who want to attract millennial buyers, therefore, might want to make their homes as move-in ready as possible and promote that in their marketing. Millennials aren’t into fixer-uppers.
Millennials prefer smaller homes
It might be a chicken-or-the-egg situation, but millennial homebuyers tend to seek out smaller homes than other generations. It could be affordability that drives them to smaller homes, rather than the other way around, but data show that the smaller the home, the more likely it is a millennial will buy it.
According to the NAR report, the median size of a home purchased by millennials in 2018 was 1,600 square feet, easily the smallest of any other age group. In the range of homes sized 1,000 to 1,500 square feet, millennials represented a larger percentage of buyers than even their counterparts aged 73 and up.
Millennials like to live closer to cities
Millennials also tend to eschew suburban and rural housing for a chance to live closer to city centers and urban areas. It is very obvious in the Hudson Valley with it’s proximity to New York City.
Only 48 percent of millennial homebuyers purchased homes in the suburbs in 2018, lower than all but one age cohort (45 percent of those 64 to 72 bought in the ‘burbs). Also, groups both 28 and younger and those ages 29 to 38 had the largest percentage of homes bought in urban areas and city centers.
One big factor would seem to be work commute times. Of 2018 homebuyers who were 28 or younger, 71 percent listed “convenient to a job” as a factor influencing a home purchase. That response was only 44 percent among buyers of all age groups.
Despite some obstacles, millennial homebuyers are expected to drive the residential real estate market in 2020, which means home sellers might do well to know what they want in a home.