5 Millennial Home Buying Trends to Look Out For
July 10, 2017
With each passing year, millennials (anyone born between the years of 1981-1997) are becoming an increasingly dominant market segment in the home buying market. The importance of this growth cannot be overstated, as the home buying needs and wants of millennials are very different than those of previous generations, such as baby-boomers and members of Generation X. While younger millennials will usually rent an apartment in their early to mid 20’s, many will decide to live in the suburbs once they’ve become acclimated to the professional world. The real estate market is ever evolving which sees constant change with the latest advancements in tech, from online independent research to home buying apps that help substantially with a home search, making it easier for buyers to narrow their choices. When selling your home to an increasing generation of millennial home buyers, staying current is vital to the success of your real estate goals.
1. Less Desire for Big City Living
One of the more substantive buying trends with millennials is less desire for big city living, displayed through an increasing trend of moving to suburban areas because of their lower cost of living, better schools, and a wide array of other appealing factors. Take a recent Urban Land Institute study as an example, which shows that the rate of millennial home buyers purchasing a house in an urban location has dropped dramatically over the past few years, from 21 percent in 2015 to just 15 percent in 2017, a trend that shows no signs of stopping anytime soon.
Another study conducted by Demand Institute reported that a whopping 48 percent of millennial home buyers would purchase a house in the suburbs for their next home, a number that will only increase over the next few years as suburban life becomes increasingly appealing to these buyers. This same study found that a startlingly low 11 percent of millennials surveyed wish to purchase a home in the city. If you’re currently in the middle of your search for a new home and are wondering why this change is occurring, the main reason is affordability, which is compounded by a more inviting atmosphere in many suburbs and better schools as well as rising prices in most urban cities. Finding a good apartment in larger cities like Los Angeles, San Francisco, and New York is practically impossible for anyone with any kind of a budget these days.
As millennials are reaching their late 20’s and 30’s, many are starting to consider settling down as opposed to living a single life, which is why an increasing amount are searching for a home to live in instead of an apartment. While cities are still appealing to millennials as great destinations for vacations and day trips, the rise of telecommuting provides these home buyers with an alternative to living in the city for work, giving them more convenient options to match a quieter and more peaceful life. Although living in the suburbs and commuting to the city can take time, the benefits of suburban living are proving to be highly appealing to millennials of all ages.
2. An Increase in First-Time Home Buyers
Although we’re only halfway through 2017, the first six months of the year paint a clear picture of an increased trend of first-time home buyers, the majority of which are millennials. In a large survey held by Realtor.com, there was a drastic increase in the number of first-time buyers from 2016 to 2017, rising from just 33 percent in 2016 to a very high 52 percent in 2017. Of these 52 percent, just over 60 percent are below the age of 35 and are primarily millennials.
With more and more young people purchasing homes instead of renting apartments in the city, the competition will be stronger, which is why now is such a great time to buy before the numbers increase even more! The Realtor.com study also shows that a mere 25 percent of millennials are interested in multi-family homes and condos, while just under 40 percent would prefer to live in a single-family home, a drastic increase from previous years.
3. Millennials Want More Space
One of the least appealing aspects of city living are the smaller living spaces, which are prevalent in apartments and difficult to get away from unless you’re paying thousands of dollars each month in rent. When shopping for a new home, millennials tend to search for properties that comprise of more space, both indoors and out, which is why suburban areas are increasingly appealing as an alternative to urban living. As touched upon previously, the quietness, safety, and privacy of a suburban home are speaking more to millennials than the hustle and bustle of the city, causing them to gravitate towards these homes instead of moving from apartment to apartment.
While privacy and security are some of the top reasons as to why millennials are finding suburban areas to be more appealing to their sensibilities, the openness of a single-family residence as opposed to an apartment is something that a lot of young buyers are taking into consideration. For example, consider a study conducted by the TRI Pointe Group this year that shows that an overwhelming number of millennials, nearly 60 percent, feel that an outdoor living space is absolutely essential to have when purchasing a home. The reason for such high numbers, according to the study, is because millennials apparently find porches, patios, and decks to be highly appealing, more so than any other generation.
Another clear example of an increasing trend in open space preferences is seen with the fact that younger millennials are starting to eschew purchasing what are known as “starter homes”, which many previous generations used as their first home. These houses are typically very small with little square footage, smaller yards, and just one or two bedrooms at most. The houses preferred by millennials, even first-time buyers, are sizable homes of at least 2,300 sq. ft., as shown in a study by NAHB, and homes that are outfitted with at least four bedrooms.
4. Open Floor Plans & Kitchens
Similarly to the open indoor and outdoor spaces with high square footage, millennials tend to prefer open floor plans and kitchens, which are plans that allow for rooms to connect more fluidly and naturally instead of being closed off as they are in many homes and apartments. This type of preference is also evident in the changing work environments that are transitioning from traditional office settings to creative workspaces and floorplans designed to increase efficiency and productivity. Millennials want to move around their homes in a natural way that doesn’t make them feel closed off from the rest of the house.
In the TRI Pointe Group study referenced previously, one of the most sought-after home features by millennials is an open kitchen, with 53 percent of millennials believing this feature to be a must-have in their next home. Open kitchens provide ample access to the rest of the house, providing you with the means of conversing with everyone else without issue, no matter where they’re located in the home. A few of the most popular benefits of open floor plans and kitchens is that family members can keep in touch when doing different activities, walls and beams are kept to a minimum to facilitate natural light, and the open spaces make the size of the home appear to be larger.
5. Millennials are Using Tech to Find and Buy Home
One of the key factors in why trends differ with millennial home buyers and buyers of other generations is in the tech being used by millennials. When searching for a home, a vast majority of millennials utilize sophisticated technology at their disposal, which is evolving by the day and currently includes the usage of smartphones and mobile apps to help with their search. With thousands of real estate smartphone and mobile apps available on these devices, millennials are able to make their search for a new home much more convenient. With just a few taps on the screen and clicks of a button, users of real estate apps can narrow down a search by very specific criteria, allowing them to hone in on the exact home they want to purchase with the exact amenities they wish to pay for.
This kind of technology wasn’t available to previous generations in such prevalence and is one of the primary reasons that trends are so different and unique when comparing millennials to past generations. Now more than ever, your online representation is absolutely vital to the success of selling your home. Without tapping into such an important portion of the market, prospective home buyers will turn their attention towards other homes that have an adequate online representation and provide them with what they’re looking for at the moment they’re searching for it.
The Bottom Line
As millennials continue to purchase homes for the first time, the real estate market will continue as well to go through changes of its own to facilitate such an intriguing and dominant market segment. From the utilization of new technology to the preference of open spaces and disinterest in large cities, millennials are among the most unique home buyers out there. Now that millennials make up such a large part of the market, selling a home must take these buyers and their interests into account.
If you’re searching for a real estate firm that will provide you with an unmatched level of service, our professional real estate agents utilize the latest tech combined with years of experience to provide valuable insight that will make your next real estate experience a successful one.
Contact our team or stop by our Westlake Village office today for more information and to get started on your search for a new home!