The Millennials are here – and rocking the real estate market.
As the generation born between 1981 and 1996 comes of age, there are significant shifts in behavior, lifestyle, and needs. Most millennials are paying off student loans, moving out of their parents' homes or their rental apartments — and buying their first houses.
A recent survey conducted by the National Association of Realtors (NAR) revealed that both Younger Millennials (22 to 30 years old) and Older Millennials (31 to 40 years old) make up 37 percent of the share of home buyers. There are many factors that contribute to the surge in millennials’ home buying share.
With changes to the economy brought on by Covid-19, a drop in interest rates, higher incomes, successful careers, and zero student debts, millennials find themselves amid a wonderful opportunity to buy a home.
What is on the horizon as millennials confront “middle age” and buy their first homes? We explore the Millennial generation’s impact on the house buying market, the elements, and influences that have contributed to the rise in their purchasing numbers – and more importantly, the things they want in a home.
Compared to other generations, millennials are buying their homes later in life. But
now that they are comfortably settled in their careers, with higher incomes, and paid off student loans and other personal debts, millennials are finally taking the big step to buying their first homes – and making it a top priority.
After years of renting or living with their parents to save money for a future home, millennials know their options, and exactly what they want in a home. While there are some similarities to what their parents looked for in a home, there are features that clearly speak for their generation.
The three things that are top of mind when millennials consider potential homes are:
Older homes in the suburbs – like this Queen Anne – are attractive to millennials because of the possibilities of creating interior spaces and outdoor living areas to their specifications. Photo credit: Rexy Legaspi
Since millennials now comprise the largest demographic of home buyers, developers can provide them with the sense of community they are looking for by designing subdivisions that are within walking distance to schools, coffee shops, and fitness/recreation/arts centers. Another element of new builds that will appeal to millennials is the proximity to public transportation.
A media room adjacent to the exercise room in a two-story Country manor plan is a very appealing feature for millennials who love dedicated specialty rooms. In addition to this, the 3,149-square-foot home has four bedrooms, three bathrooms, a powder room, a spacious open living room, a huge kitchen, a loft, and a basement. (Plan #161-1151)
A study by the NAHB (National Association of Home Builders) showed that more than 80 percent of Millennials wanted laundry rooms, hardwood floors, patios, and garage storage.
Big Kitchens with huge kitchen islands and informal seating are a must for millennials who put an emphasis on cooking, hosting, and entertaining. Some of the “must-haves” in these kitchens are stainless steel dishwashers, sub-zero refrigerators, built-in wine coolers and microwaves, window seats, and built-in seating.
An alternate view of the home’s large, bright, and airy kitchen shows the seating plan. (Plan #202-1014)
When it comes to bathrooms, millennials are partial to these modern features: a dedicated dressing room/makeup area, his and hers baths, and whirlpool tubs.
… and a free-standing tub that will attract the millennial buyer. The one-story, 2,650-square-foot home has three bedrooms, 2.5 baths, an open floor plan with a Great Room, dining area, kitchen, a covered back patio that accommodates outdoor activities and entertaining. (Plan #161-1119)
Millennials are likely to have a Smart Home. For this technology-inclined group, the capability to interact with their homes as they do with smartphones is an exciting prospect. There are many gadgets designed to set up a smart house and help overcome wearisome tasks. Automated security, heating and cooling, and lights are just a few modern technologies that simplify modern living.
For example, smart home hubs like Google Home and Amazon Alexa give homeowners the opportunity to control their electronic devices through a single app.
Think of the possibility of installing an automated smart lock inside the door of this two-story, three-bedroom Contemporary style home that can be accessed via a smartphone. (Plan #161-1106)
Pre-World War II homes with brick, stucco, and stone exteriors – which would include Victorian, Queen Anne, Arts & Crafts bungalows, Craftsman, Tudor, Colonial, and California Mission styles.
Homes built between 1945 and 1965 such as Mid-Century, Prairie styles, and Eichler homes with flat roofs, courtyards, and open floor plans.
Then, there are the Mediterranean, Spanish and Italian styles with their stucco exteriors, terracotta tile roofs, wrought-iron accents, ceramic flooring, winding staircases, and patios.
With its rock and stone façade, gabled roof, and colorful front yard, this one-story Craftsman style home has all the exterior elements that are attractive to millennials. With 1,831 square feet of living space, the charming home includes a covered front porch, an open floor layout with a spacious Great room, raised ceilings, kitchen with a breakfast nook, and pantry. (Plan #109-1013)
Another Pre-War favorite of millennials is the Victorian style as in this gorgeous two-story plan that features three bedrooms and two bathrooms. The welcoming covered front porch with all the decorative details, the turret, and the gabled roof add to the charm of the home. (Plan #126-1248)
An affinity for the flat roofs, open floor concepts, and the connection between the interior and outdoor spaces of homes designed by Frank Lloyd Wright and Joseph Eichler, make the Prairie and Mid-Century styles top options for millennials. The Prairie style home depicted above is a one-story, 5,300 square-foot residence with an open floor plan, five bedrooms, four baths, a Great Room, large kitchen, den, recreation room, theater/media room, and a spacious shop under the garage. (Plan # 115-1206)
Millennials are also drawn to the Mediterranean style with its signature terracotta tiled roofs, stucco exteriors, arched doors, and windows. The amazing design above is a one-story home with a courtyard entry. covered front and rear porches, four bedrooms, powder room, four baths, and other remarkable features. (Plan #175-1251)
Given that most millennials lived at home to save up money to pay student loans and buy their first homes, it makes sense that they want affordable homes - with the majority opting for homes between $100,000-$200,000.
However, according to a survey conducted by Clever Real Estate and Pollfish, 27% are comfortable paying between $200,000-$300,000; and 15% were willing to pay between $300,000 to $400,000.
Millennials will rely on a realtor’s negotiation skills, valuable relationships, and ability to facilitate the home buying process.
Time will tell how long millennials will dominate the mortgage market. By streamlining the home buying process and demonstrating online savvy, this generation has already created a meaningful impact on the industry. As millennials settle into their new homes and communities, we wait for the next chapter.
Footnote: The lead image in this article is a Farmhouse style home with inviting front and rear porches. For details on the 1.5-story plan with 1,999 square feet of living space, three bedrooms, and an unfinished basement, check out Plan #106-1328
Sources:
National Association of Realtors - 2021 NAR Home Buyer and Seller Generational Trends
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