Millennials are having an impact on nearly every phase of American life, so why should real estate be any different?
Shunning home buying in the wake of the housing meltdown, staggering rents are sending many young people to online real estate marketplaces, in search of homes of their own. Many, however, face challenges in juggling student loan debt while trying to scrape together a down payment.
Still facing these financial hardships, young homebuyers nonetheless have pretty firm ideas about what they want – and don’t want – in a home, and the market is beginning to cater to them.
Paul Taylor, executive vice president of the Pew Research Center and an expert on generation differences, says today’s young people are different from their parents and grandparents in ways that are already impacting all aspects of life. For one thing, they are in no rush to get married and have kids.
And while the path to homeownership is harder now for Millennials carrying student debt, dealing with rising rents, and experiencing stagnant wages, research by the National Association of Realtors (NAR) shows that Millennials still see the value in owning a home.
Biggest share of buyers
In fact, for the second straight year NAR research shows Millennials represented the largest share of buyers in 2015. The survey additionally found that an overwhelming majority of buyers search for homes online and then purchase their home through a real estate agent, with Millennials using agents the most.
“Over 80% of Millennial and Gen X buyers consider their home purchase a good financial investment, and the desire to own a home of their own was the top reason given by Millennials for their purchase,” said NAR chief economist Lawrence Yun.
Yun said having fixed monthly payments and the long-term financial stability are a big part of the attraction.
What Millennials want
When young buyers look for a home, what exactly do they look for? According to the Houston Business Journal, it’s not what you think.
Despite their urban, hipster image, when Millennials decide to put down roots, they look in the suburbs. Part of that decision may have to do with price. Housing in the suburbs costs less than in the city, generally.
They also don’t need a lot of square footage. A basement rec room, for example, probably won’t be a big selling point.
Millennials don’t own a lot of “stuff,” so they don’t need space to store it. At least, they don’t think they do. So an older 1,200-square-foot bungalow in a close-in location will be a lot more appealing than a 2,400-square-foot colonial in a new development.
While their influence is beginning to be felt, this could only be the beginning. Taylor cites statistics showing 39% of Millennials were still living with their parents in 2015.