The Millennial generation is known for dancing to the beat of their own drummer—so to speak. It’s no wonder that they have different values, expectations, and methods when it comes to their home buying approach as compared to other generations. Often typecast as “lazy” and “entitled”, millennials have gotten a bad rap in the housing industry for being chronic renters who don’t want to ever buy a home. But the truth is, that couldn't be further from the truth.
Millennials are purchasing homes, but they are just getting started a little later than previous generations. Millennials not only want to invest in buying a house, but they also lead all other generations in home buying activity and have done so for the past five years according to the 2018 Home Buyer and Seller Generational Trends study from the National Association of Realtors. So, what drives the decision-making for the Millennial generation when buying a house? Here are three key factors that play a part in the overall home buying experience of millennials.
1. Technology Drives Decision Making.
During the last couple of decades, there has been significant growth in the development of technology across all industries. Compared to other generations, millennials have been the only group to grow up with majority of these major advances from the start including things like cellphones, laptop computers, Uber and Amazon. As a result, technology is central to how they make decisions.
As digital natives, millennials are comfortable shopping online no matter the price tag, product or service. In fact according to the 2019 National Association of REALTORS report, an amazing 81% of millennials found their home on an app last year. This tech-savvy and cost conscious group demands a seamless experience when it comes to technology and wants instant access to information. They want to view and compare any home, at any given time, in any part of the world. Millennials appreciate high quality, vivid photos or videos and are constantly looking for new approaches to use during their home buying journey. They want advanced search tools, virtual reality tours, and a faster way to apply for and get approved for mortgages. Technology will always be evolving and top priority for millennials.
2. Affordability and Location Matter.
For all generations, affordability and location are a huge deciding factor when buying a home. For millennials, those factors are pivotal. The 2008 housing market crisis hit this group hard and made them wary of the entire home buying process. They grew up in an unstable labor market and watched credit standards tighten -- making it more and more difficult to get a loan.
Most millennials desire to live in urban areas, but they simply can’t afford it. This doesn’t mean they don’t want to buy a home. On the contrary, the exact opposite is true. According to Bank of America’s 2019 Insight Report, 72% of millennials want to buy a house more than they want to get married or start a family. Many equate purchasing a home to being financially successful. However, feeling financially successful and being able to afford today’s housing prices are two different things. Most millennials don’t have the luxury of bringing equity from a previous home to help with the cost—which makes affordability a critical factor.
The astronomical cost of urban housing has sent many fleeing to the suburbs in order to keep their costs down. Across the nation, there is a shortage of starter homes in urban areas that have a comfortable price point. Also as millennials continue to face tremendous student loan debt, they are struggling to come up with the down payment they would like to make.
The lack of affordable housing has unbelievably caused a generational divide. Urban Boomer homeowners have the upper hand right now in America and are the oldest and most wealthy members of society. Past excellent market conditions rewarded them and very few struggle to come up with a down payment as home prices increase. Unfortunately, the Boomers and the Millennials are seeking identical property in size, amenities, and neighborhoods. As far as the Millennial generation goes, they will likely continue to flock to locations where the unemployment rate is low, the housing is affordable, and they can get as much house as possible for their money.
3. The Educated Consumer Effect.
Millennial buyers are a group that does their research. They are entering into the housing market well-prepared and know what they want. Due to the influence of the internet on their livelihood, this group consistently reads reviews, looks at ratings, and efficiently accesses an abundance of information. And while they trust their own instincts and abilities to a large extent, they still seek guidance and support from a real estate broker when it comes to purchasing a home. Basically, once they have scoured their social media, network, and other online sources, they turn to the help of a real estate agent to be guided through the remainder of the process. The real estate agent will be able to fill them in on anything they might have missed during their own research process. This includes things like finding which neighborhoods are trendy, which housing developments will rise in value over time, which schools people think are best, etc. They also want help negotiating the best price, drawing up the contract, and landing a good mortgage loan.
Many millennials are drawn to technology-based real estate agencies because they have a multi-level approach that allows them independence in their home buying research and support at any given time with their own personal real estate agent. At SimpleShowing, we get that. We understand what millennials need and provide all the tools to help you get the home of your dreams. In fact, we help guide you through the entire buying process from start to finish and reward you for the work you do in the home search process with our Buyer Refund Program.
The Millennial generation will continue to acquire more purchasing power each year. Technology, affordability, location and education will continue to affect their home buying experience and ultimately how they acquire a home.
For more articles on buying a home, keep reading below:
- Home Inspection Checklist For Buyers: What You Need To Know Before Inspection Day
- Who pays the buyer's agent commission?
- What To Do After You’re Under Contract
- 5 Pro Tips To Get Your Offer Accepted On A Home
- Four Essential Tips for Newlyweds about to Buy Their First Home