There is a seismic shift in the real estate market and it’s all due to the Millennial generation.
“Millennials have represented the largest share of the home buying market for the past five years in a row with the 2022 share at 36%,” says Anna DeSimone, author of Housing Finance and a housing advocate.
It’s no secret that, compared to previous generations, Millennials are late to the home buying game. Both their parents and the press lament that many Millennials either live at home or are simply more content to be renters. As a result, there is a perception that owning a home was not a priority of this generation. But the real answer might be simpler.
“Affording a home, one could argue, was relatively easier for the previous generation,” says Farnoosh Torabi, Personal Finance Expert and Host of the highly rated SoMoney Podcast which focuses on Millennial money issues.
Even though Millennials have been adults in a consistently low interest rate environment, the barrier to entry to the real estate market has been high for this generation.
Torabi explains it quite simply as a perfect storm. “While research suggests Millennials are even more interested in buying homes than their parents, they are slower to buy due to a set of financial challenges, which include student loans and credit card debt, as well as an inability to save up for a down payment,” she says. “Wages have been pretty stagnant, on average, over the last 15 years, all while the cost of living, education and housing has skyrocketed.”
Yet like everything that Millennials have faced, they are about to revolutionize home buying and put their own personal stamp on it. And in some instances, they may be rewarded for their patience by some unique partners.
More Personalized, More Service
Previous generations were buying homes in an entirely different world. Buyers found their realtors through personal referrals, the Yellow Pages or by simply walking into an open house. If the right chemistry was there, it was often a stroke of luck.
But from dating apps to subscriptions, the Millennial generation is both captive to and captivated by technology, which has found its way into the home buying process. The National Association of Realtors reports in Homebuyer & Seller Generational Trends in 2019 that 81% of older Millennials found their home through a mobile app. Given this, the real estate world is recognizing that leveraging technology will enable it to capture the generation focused on ‘swiping right’.
Realogy, which owns some of the top national real estate firms including Coldwell Banker and Century 21, is using technology to create a unique Millennial home buying experience. It has partnered with Amazon to offer the TurnKey Home Purchase Service. By answering a few questions online, the potential home buyer is matched with an agent who is best suited to find them their home. For older generations, this may seem like an odd choice, but it works well for the needs and habits of Millennial buyers.
“People are seeking slightly smaller homes, and want properties that suit their lifestyle, such as larger yards for pets, or organic gardens. Location preferences have changed and many Millennials want to live in a walkable city or near public transportation,“ points out DeSimone.
Treating the real estate agent relationship like a successful Bumble connection will likely result in a more satisfying experience for the Millennial home buyer.
Rewards for Technology
But the technology doesn’t stop there. In fact, in the real estate transaction, the technology is beginning to dictate lifestyle.
When previous generations purchased their first homes, they were on their own once the sale closed. Gen Xers and Boomers counted on hand-me-down furniture and housewarming gifts from family and friends to make their new house a home.
But in catering to the Millennial homeowner-to-be, real estate companies realize that this generation, having waited to purchase a home, want to make it their own quickly. When a home is purchased through a TurnKey agent, the homeowner receives for free smart home products worth from $1,000 to $5,000 based on the home purchase price. Further Amazon will even include in the offer free in-home services like hanging TVs or cleaning.
Torabi agrees that this type of service really appeals to Millennial home buyers. “One trend that we’re seeing across new home buyers is the desire for ‘optimized’ homes that cater to one’s well-being. such as spaces for meditating, workout areas, expansive kitchens, and an eco-friendly environment,” she says. “They want to make sure their house accommodates their lifestyle and values.”
For thirtysomethings who just spent years saving for a down payment, getting their house made ready for move in will save on their monthly budget.
Technological Changes for a Changing World
While these shifts in the home buying market might seem like marketing, it is actually foreshadowing an evolution in home ownership.
“The home buying behavior of Millennials continues to change,” points out DeSimone. “Millennials are environmentally conscious, and are seeking energy conservation, open spaces, walking trails and sustainability in their home choices.”
Further, as they have struggled under the pressures of debt and stagnant wages to finally buy a home, perhaps gaining goods and services in the home purchase process is a fair outcome. But it also shows that as Millennials continue to be the largest segment of home buyers, they are going to demand that the market caters to them. Follow me on LinkedIn. Check out my website.