Millennials are America’s largest group of home buyers who are changing the real estate market everywhere. According to reports, 37% of millennials (25 to 34) own homes; this is 8% lower than GenX and baby boomers at the same age. Why is this? Well, there are many possible causes, but let’s first start with where millennials prefer to live: cities. The cost of living in and even around cities has elevated to a far higher cost than past generations experienced. This is partly due to notorious regulation and market intervention that real-estate markets in big cities are known for, which decreases supply and increases the costs of renting and home-owning. See reports here.
Millennials are also waiting much longer to get married and have children, therefore reducing their demand for a spacious home. Lastly, the student loan debt has increased substantially with college becoming more expensive than ever; almost half of the millennial buyers have debt. So, understandably, millennials aren’t buying many homes on the whole; prices are just too high, debt is too great, and cost-of-living is too demanding for many to be able to save up the money for a down payment feasibly.
So what are they looking for?
The reasons for the millennial decrease in home-buying aside, for those millennials who are looking to buy, what exactly are they looking for? Communities with an emphasis on walkability are among their favorite places to reside. They are also looking to be close to public transportation, nightlife, and other amenities. Many are turning their noses up at the sprawling homes of their parents’ generation and instead seeking affordability and flexibility. Millennials are moving away from strip malls and highways and settling down in places with a mix of suburban and urban features, dubbed “surban”. Millennials seem to value an urban vibe to a greater extent than past generations, and devalue long commutes and periphery living.
One way to attract millennial buyers is building and renovating homes to be energy efficient. Adding solar panels to the roof, energy-efficient lighting and skylights, and most other project concerning sustainability will increase the appeal to young buyers. Federal tax incentives are becoming more and more available for energy-efficient upgrades to existing homes, and financing for solar panels are currently available that will pay off in as little as seven years depending on the tax incentive programs of your state. These “go-green” initiatives appeal to millennial progressive mindset and adhere to their tastes. Millennials have shown that, as a generation, they care a lot about the environment, so an environmentally friendly space is a great way to make them feel good about the biggest purchase of their life.
Millennials love cities, this much is apparent. However, the living costs associated with city living have elevated to a frightening level in the modern-day. Why? It boils down to economics. Cities will always unavoidably have higher prices because of the increased demand to live there, and this, paired with market intervention such as rent-control and zoning regulations, is resulting in sky-high living prices. In extreme cases, the over-regulation and interference in housing and rental markets decrease or even stagnate the growth of new housing stock. Because of this, prices for the existing houses increase through supply and demand. Thus the best, and arguably the only way, is to get millennials in mass start to buy more homes going into the future is to decrease the cost of them.
Millennials have become quite enthusiastic over what they call “affordable cities” for this reason. They are exactly what they sound like: affordable, modern cities that give the feel of urbanity while maintaining a low living cost to the citizens. More and more young adults are moving out to and settling down in the Midwest. This trend should not be at all surprising, as some simple math can show anyone that the average millennial needs 28 years for a San Francisco down payment, compared to less than three in Kansas City. The conglomeration of universities, cheap real estate, and fresh development is creating pockets of youth in Midwestern places like Kansas City and reviving entire parts of the cities’ economies as well as increasing their populations. Des Moines is another city millennials love. Their population grew by 1.76% last year; mainly through the addition of new citizens fleeing the high living-costs of “superstar cities” such as Los Angeles, San Francisco and New York.
Yards & Dog Parks
One of the top things that millennials consider when buying a home is their pets! Here are the facts: Realtor.com states that a whopping 73% of millennials currently own a pet, and 89% of the millennials who bought a home in 2018 owned a pet. On top of this, 79% of pet-owning homebuyers who closed on a property in 2018 said they would pass up an otherwise perfect home if it did not meet the needs of their pets. Wow! Numbers like these are nearly infallible; it seems that millennials unquestionably adore their pets, especially dogs. The needs of their furry friends are near the top of the list of things affecting their home-purchasing decisions.
With marriage rates falling and people waiting until unprecedented ages to have children and start families, dogs and other pets are increasingly the only families that young adults live alongside; and they’re treated as such! Pet-centered amenities such as dog-parks, big back yards, and running trails are often just as important in a home purchase to a millennial as any other amenities. If you’re selling your home, or perhaps you’re a landlord and you’ve noticed a lack of pet-friendly amenities associated with your property. Take action and consider installing a fence, modern pet door, or a dog grooming station; also consider advertising any local pet-friendly locations such as restaurants or pet-supply stores. So, in sum, to successfully attract young adults to your property, don’t forget to cater to the needs of their faithful companions, or you may find yourself unpleasantly surprised!