How Do Millennials Behave in the Housing Market?
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| They're starting families and buying houses, but how do they behave? |
It’s happening. Millennials are finally old enough to start families (even though many of them don’t want to), buy houses and make their full way into the U.S. housing economy. This 2018, one of the biggest trends to be expected are the changes and impact that the millennial population will have on real estate. Most of them are still paying for college loans, and they don’t have many resources to purchase expensive properties, but we still have to understand what their aim is and what they want their future to look like so we can successfully target their needs.
What are millennials looking for?
This is a generation that values the potential of extensive research like no other before. Thanks to the Internet, everything a millennial wants to know is just a click away. They can spend hours, days and months doing as much research as they can before actually making a decision. This not only means they’re hard to fool, but they can also be extremely picky. Besides, they’re not alone. Parents are getting involved in the purchase process as well. While millennials are investigating and looking for information online, parents are joining them when visiting houses and their opinion has a strong influence on the final decision.
Millennials see owning a house as one of the main parts of the American dream. And they want it. The majority of the members of this generation are expecting to buy their first home within the next 3-5 years. Around 92% of them want to hear from experts’ advice, so they’re more likely to hire realtors to buy a house. They’ll probably find their dream home on the Internet, so they’ll want to have access to high-quality photographs of the properties they’re interested in. As of now, 76% of millennials drove by a home because of an online ad.
Median household income for young adults is $82.000, and they owe around $25.000 in debt. This means millennials have little time and resources to upgrade their homes, so they’re mostly looking for move-in ready houses. Newly built properties with no plumbing or electricity problems make them tick, as they want to avoid renovations. After all, they’re more likely to move out from their first house in around six years so they can upgrade to something better.
Must-have features
Millennials are part of a generation that’s deeply concerned about ethical commitment and environment-friendly policies. They’ll look for that in houses as well. Green features such as energy efficiency are very attractive for young adults. Around 47% of them say they want solar panels and efficient energy storage, being willing to upgrade to these features out of their own pockets.
They also want big kitchens that flow into other rooms, because they use it as the hangout center of their homes. They want to have appliances included when they buy a home and a dedicated workspace to focus on their projects. Technology is a must when it comes to picking a house for millennials, call reception and Internet provider options are deciding factors when going home buying.
On the other hand, 66% of millennials say convenient location to their job is the most important factor when it comes to choosing a neighborhood. Access to cities is crucial as well, but they’re not as urban as one might think at first. They actually prefer the suburbs and live outside urban cores.
How millennials could change the housing market
Now, housing prices are heavily driven by households. The more there are, the more upward pressure is exerted on housing prices. Today, there are around 25 million young adults still living with their parents. Many millennials are desperate to move out from their family homes and start living on their own, but they don’t have the money they need to do so; they struggle to find a job, or they’re not ready to commit to a romantic relationship and start a family. Actually, the truth is that just 26 percent of 18-to-33-year-olds are married. By comparison, 36% of Gen Xers, 48% of Baby Boomers and 65% of the Boomers’ parents were married at that age.
As supply shrinks and demands rise, builders could start developing more affordable houses for single households in the suburbs or the city to meet the millennial population’s needs. They don’t necessarily look for big spaces, as their parents might have needed, because they prefer flexibility and access to services. Either way, the market will be full of first-time buyers (66% of which are millennials), and competition will rise high among fixed up homes and newly constructed properties.
What do millennials look for in mortgages?
Finally, one thing millennials can struggle with is the time-consuming process of acquiring a mortgage. This gives this generation the potential to change the mortgage market. They’re asking for technology-driven processes that enable borrowers to submit documentation digitally and improves the customer experience. Trust in big banks is falling and millennials take into strong consideration their peers’ opinions before making a decision.
Online tools should be used to empower buyers. Lenders need to connect with millennials by being useful and informative, as well as being able to make the process as simple and efficient as it can be. This is a “do-it-yourself” generation, so that’s the way they should be targeted. They want faster closings and do their part to move applications along. Even though they’re skeptical, if lenders show transparency, consistency, and efficiency, they’ll be trusting and committed to one lender, recommend it to others, and collaborate with them through the whole process.
Sometimes, millennials are not taken very seriously, but they definitely have the potential to transform the U.S. economy and the housing market. That’s why at Intercorp Mortgage Solutions, we focus so much on sharing as much information available for our customers online and connecting with them through social media. Stay updated for more as we explore what 2018 brings for us!
Sources:
4) The Balance
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| What do millennials look for when buying a house? |
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