Six Things to Know About the Millennial Housing Boom
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Millennials (also called “Generation Y”) are making a big impact on communities. Comprising the youngest adult population in America (think people born between about 1980 and 1995), these individuals now constitute 31% of all new home and condo sales, according to the National Association of Realtor’s Home Buyer and Seller Generational Trends study 2014. Here’s a breakdown that puts it all into perspective:
|Generation||Year Born||2013 Age||%Home Purchasing||Median Age|
|Millennials||1980-1995||33 & Below||31%||29|
But let’s stop and think for a moment: how different are you from your parent’s generation? Now imagine the cultural gap between many association members and this younger wave of residents. Maybe now’s a good time to fully understand the buying and behavioral habits of this group – that way, associations can have more success when it comes to engaging with this next generation. With that in mind, here are some things you should know about the Millennials.
1. There’s a lot of them.This is the biggest generation since the Baby Boomers. That means residents aged 33 and under are about to play a huge role across the national stage...and in our communities. In fact, one report estimates that in the next five years, 8.3 million new Millennial households will form. This also translates to big business. The Demand Institute reported that Millennials spend $1.6 trillion on home purchases and $600 billion on rent.
2. They’re buyers.The culture of home ownership seems to be entrenched in Millennials. A report by the National Association of Realtors found that 87% of recent buyers aged 33 and younger said they consider their home and condo purchase a “good financial investment”. That same report indicates that about half of these buyers made their decision simply out of a desire to own rather than rent.
3. They’re stable.This isn’t a buy-and-flip generation. 87% of Millennial buyers report that they plan to stay in their homes for a median of ten years. Nearly all of them financed their homes, so they have the financial wherewithal to secure mortgages. The median income for this group was reported to be $73,600.
4. They’re trending westward.The best purchasing markets for Millennials is geographically specific. By that, it means pretty much anywhere except back East. The NAR reports that the most Millennial-friendly markets include Austin, Dallas, Denver, Des Moines, Grand Rapids, Minneapolis, New Orleans, Ogden, Salt Lake City and Seattle. Though Washington, D.C. and Raleigh, NC showed some potential, the majority of markets trended West or Midwest.
5. They rely on their mobile devices.No surprise here, but it’s good to know the data supports what everyone has seen anecdotally: smartphones are a huge part of the lives of Millennials (this goes for those Gen X-ers, too,). More than half of Gen Y homebuyers used a mobile device during their home search...and their generation was the highest percentage of buyers to report ultimately finding the home they purchased on their mobile device at 26%. Incidentally, all generations – from Millennials to Boomers – cited consulting the Internet as their first step in the home buying process.
6. They’re first-time buyers.It makes sense that younger purchasers report the highest incidences of first-time buying. That holds true with Gen Y, who occupy the largest share of first-time buyers at 76 percent.
No doubt about it, Millennials are changing the face of home buying, and our communities. Understanding a generation that’s willing to put down roots and feels strongly about home ownership – but who is also more likely to go to a smartphone than a neighbor for questions or help – can help associations develop programs that help Millennials feel more engaged. After all, these “kids” are now the grownups who are defining our communities.
For more research and insight, contact FirstService Residential.