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5 Ways Millennials Are Changing The Real Estate Scene

Millennials.

They’re the generation of people born between the 1980s to early 2000s, or also called the Generation Y. Many stereotypes have influenced how they have been viewed by the public, including the typical assumptions that they jump from one job to another, that they couldn’t even save for a down payment, or that they overspend.

But the recent 2018 Better Money Habits Millennial Report by Bank of America says otherwise. “Millennials deserve more credit — both from themselves and from others — for their mindfulness when it comes to money and their lives, ” says Andrew Plepler, Global Head of Environmental, Social and Governance. This key takeaway is related to how millennials are saving and managing their money. And when it comes to saving, at least 33 percent of millennials prioritize saving towards buying their first home.

In the NAR Home Buyer and Seller Generational Trends Report 2017, it is expected that 66 percent of millennials will buy homes in the next five years. And while each generation is different, there’s no doubt that millennials have their own set of unique attitudes and preferences towards home buying.

“Millennials are shaping the market more than anyone realized,” says Jeremy Wacksman, Chief Marketing Officer at Zillow Group. According to the 2016 Zillow Group Report on Consumer Housing Trends, 50 percent of today’s US home buyers are under 36 or those who are called Millennials, which means they are shaping the future of real estate. They are having an impact on the industry through their growing influence on the market.

Here’s how the millennial generation is changing the real estate market:

1. They are tech-savvy researchers

More than any other generation, millennials prefer to approach the home buying process in a more digital fashion. The Zillow report further stated that the process of finding or selling a home is a much more collaborative process for them. They bring all available tools to the process, such as their smartphones, social media and online networks.

In the NAR Real Estate in a Digital Age 2017 Report, a whopping 99 percent of Millennials searched on online websites while looking for a home, compared to the 89 percent of Older Boomers and only 77 percent of the Silent Generation. At least 58 percent of millennials also found the home they decided to purchase on their mobile devices. They also rely on online customer reviews more than any other generations.

As they technically live in a world that is ruled by technology, real estate investors, firms, and even real estate agents need to boost their online presence in order to attract more millennial buyers and sellers.

2. They are very comfortable trusting a realtor when purchasing their home

Despite being the most tech-savvy home buyers, millennials were the number one buying group to purchase their home from a realtor. They might have done their research first before stepping into homeownership, but they are still very comfortable in trusting the experts. At least 92 percent of millennials purchased their home through a realtor, and 74 percent said they wanted help in understanding the purchase process. They value the personal experience and insights that only a top real estate agent can provide. Millennials expect real estate agents to become trusted advisers and strategic partners. Likewise, it might also be related to the fact that their age group had more difficulty handling paperwork and understanding the process than any other generation.

3. They want specific must-have features in a home

As the real estate sector becomes more focused on millennials as home buyers, the market is also focusing on what millennials specifically want in their homes.

Millennials mostly want to buy newly-constructed homes, rather than fix-uppers, to avoid dealing with renovations and other plumbing and electricity problems. Likewise, they also have specific features that they want in a home they purchase. Some of the features they prefer include a spacious kitchen and an open floor plan, a dedicated workspace for those who are working from home, energy efficient appliances, updated kitchen and bath, and new technology and smart home systems.

A unique study was also conducted by Northshore Fireplace in 2016 to know what millennial buyers are looking for in a home. The results have revealed millennials value these features most: new appliances, a large master bedroom, a 2-car garage, solar panels/energy storage, and a luxury kitchen.

Millennials are also most likely to choose a home that is located closer to their work, so they can save time and gas. At least 65 percent say convenient location to their job is the most important factor when choosing a neighborhood.

4. They are least likely to view homeownership as permanent

Only 11 percent of millennials said they view homeownership as permanent, compared to 37 percent of seniors and 29 percent of baby boomers. It was also revealed in the Bank of America 2017 Homebuyers Insights Report that 68 percent of millennial homeowners say their current home is only a stepping stone towards their dream home. They see the value in buying early but realize it may mean putting their dream home on hold for now. It also reflects the average of six years that millennials are keeping their home before selling, compared to 10 years for the rest of homebuyers. This trend can influence would-be buyers to purchase sooner.

5. They highly associate homeownership with the American Dream

This is probably one of the main reasons why they currently dominate the housing market. At least 65 percent of people aged 18-34 associated home ownership with the American Dream, more than any other age group. It is despite the fact that they wait longer to buy their first home compared to their older generations. Most of today’s home buyers are also redefining the so-called “starter homes,” which is now as large as the median homes for “move-up buyers.”