Depending on the news source you reference, millennials are either in the market for major fixer-uppers or mansion-sized starter homes. While both accounts are true, to a degree, the reality is much more complicated.
Born between 1981 and 1996, millennials are currently between 25 and 40 years of age. And while every generation experiences a major financial hiccup or two, millennials witnessed two “once-in-a-lifetime” crises: the Great Recession in 2008 and now a global pandemic.
Throw in a rapidly changing employment landscape and seismic shifts around major life decisions continue to unfold. Most recently, permanent work-from-home options are spurring interest in big cities, suburbs, and rural towns alike.
Despite the diversity of experiences they share, one thing is certain: millennials are poised to inherit more than $68 trillion from their baby boomer parents in the coming decade, setting them up to be the wealthiest generation in U.S. history.
This means incredible opportunity for real estate professionals who invest time in understanding their needs and challenges, offering valuable expertise, and forging long-term relationships.
Millennial highs, millennial lows
With more than a million followers, the Instagram account “Cheap Old Houses” features fixer-uppers from across the country. From stately to simple, each property listed costs around $100,000 or less.
According to MSN, 82 percent of respondents said they were more likely to buy a fixer-upper than a newer home. Of those who took the plunge, more than half had tackled small projects such as painting and landscaping within the first six months. As for larger renovations exceeding $10,000, 42 percent of millennials were relying on loans to get the job done.
On the other end of the spectrum, wealthier millennial home buyers are skipping the “starter home” altogether and going straight for super-lux properties. Driven by quality-of-life features, many are opting for vibrant, walkable cities with thriving arts and cultural offerings.
As the coronavirus hit, those who could afford it flocked to areas like Aspen and Austin for the excellent food scene, access to nature, and all-around livability. As remote work finds even more permanence, this trend is likely to grow.
Wherever they fall on the financial spectrum, this powerful demographic represents the nation’s largest share of home buyers, a market that’s definitely worth catering to.
The ongoing housing shortage
What do you get when you combine shelter-in-place orders, skyrocketing home and lumber prices, and an already sluggish home-building industry? A housing shortage for the ages.
These days, houses are getting snatched up in less than a month as aspiring home buyers find themselves in bidding wars and making all-cash offers when possible.
When pandemic restrictions shuttered lumber factories in March 2020, production not only stalled, but drove the average cost of new homes up a whopping $24,000. As the market reopened, the lumber industry could barely keep pace. Since then, lumber prices have jumped nearly 200 percent.
But millennials should take heart. NAR’s chief economist Lawrence Yun sees light at the end of this tunnel. He acknowledges that builders have been “under-producing homes since the beginning of the Great Recession” and that current starter-home inventory is still lacking. However, new home construction is finally ramping up. As pandemic fears continue to abate, more people should feel ready to hold open houses and hang that “for sale” sign.
The millennial mindset
As for deconstructing the mindset of this mega demographic, a report by CoreLogic has unearthed some interesting findings. In a nutshell, millennial home buyers are high-tech, environmentally conscious, and pretty picky. But who can blame them after being priced out and saddled with student debt for so long?
According to its recent report, millennial home buyers are:
- Willing to wait. In typical markets, it takes about four months for most people to find a home. millennials, on the other hand, are willing to search for over a year to find the location, amenities, and features they desire. Not surprisingly, their preference for new homes rose from 28 percent in 2007 to 41 percent in 2018.Tech-driven. From smartphones to smart homes, millennials want features that run on autopilot. This may include indoor and outdoor lighting, appliances, and security systems that are fully integrated and wirelessly connected. For remote workers, dedicated areas with routers, servers, and back-up power supplies bring added peace of mind.Environmentally conscious. Placing a high value on sustainability, millennial home buyers are interested in solar technologies “to reduce carbon footprint, decrease energy bills, and increase self-sufficiency,” according to Green Builder.Digitally savvy. Depending on who you ask, either 98 or 99 percent of millennials start their home search online. Either way, it’s nearly all of them and they’re expecting the experience to be efficient, seamless, and enjoyable.
For most people, purchasing a home is by far the largest investment they’ll ever make. So, it’s no wonder it often comes with a bit of buyer’s remorse –– especially with starter homes. The bathroom’s too small. The street is too noisy. There’s no room for an office.
However, a recent study by Bankrate found that a surprising 64 percent of millennial home buyers regretted their decision. That’s double the rate of baby boomer regret (33 percent). Regret fell mostly into two broad categories: financial and physical. In short, maintenance costs were often higher than expected and the house itself just wasn’t the right fit.
With the market in overdrive, buyers are making decisions faster than ever, sometimes sight unseen. That leaves ample room for disappointment, but plenty of opportunity for agents to ask insightful questions and guide new buyers toward options that truly fit their lifestyle and budget.
“One of the most valuable assets an agent brings to the picture is objectivity,” says Weichert marketing director Michele Watson. “It sounds counterintuitive, but a professional who’s not emotionally attached to any particular property can be the voice of reason buyers really need.
“Our sales process involves taking time to conduct a formal consultation with buyers to understand their why’s and wants. This way, everyone is on the same page and agents can steer clients back to their list of must-have features and away from properties that fall too far outside of those parameters.”
Done right, real estate investments can help generations of families build wealth and greater financial stability. This is where agent expertise can make all the difference.
Real estate marketing done right
Reaching this massive market is no small feat, but the rewards can be immense. The best advice? Offer information that’s authentic, useful, and easy to access. Naturally, these connections begin online. From Google Local Services ads, which lend instant credibility, to virtual open houses, millennials expect communication to be genuine, efficient, and seamless.
And although their home search almost always starts online, millennials greatly appreciate the personal attention and expertise that an agent brings to the picture. NAR’s 2021 report on generational trends finds that the majority of millennial home buyers would use their agent again. Millennials also appreciate agents who:
- Help them understand the home-buying processLead with honesty and integrityPick up the phone with important updatesCan help them find the right home to purchase
Armed with this information, top agents are creating content (websites, social media accounts, educational offerings) that conveys these characteristics from the very first contact.
Need some inspiration for reaching millennials more effectively? Here are 27 more real estate marketing tips for reaching millennial home buyers such as turning an open house into a little soiree. (That’s one way to make a lasting impression.)
As generations evolve, so do real estate trends. While it’s true we’re in a low-inventory, high-pressure housing market, this too shall pass. The goal, as always, is to think long term. As millennials dip their toes into ownership, begin building equity, and learn from experience, agents can become that invaluable advisor able to guide them through the many rewards and challenges of home ownership.
Want to learn more about how we’re marketing to millennials? We’d love to talk!