Millennials are currently entering the housing market as first-time homebuyers in increasing numbers. Their housing preferences are different from previous generations’ preferences though, and many prefer new homes over resale homes.
Millennials are a large and diverse age group and consist of everyone born between 1981 and 2000. Because this group is made up of 92 million people, the largest generation of potential homebuyers ever, tracking their preferences is crucial for home builders.
The National Association of Home Builders (NAHB) tracks homebuyer preferences in an effort to understand what people want in homes. Their recent study entitled Housing Preferences of the Boomer Generation: How They Compare to Other Home Buyers shows the similarities and differences throughout the four generations: seniors, baby boomers, Gen Xers, and millennials.
Similarities Across the Generations
In all generations, most buyers (65%) want single-family detached homes. Every generation places high priority on a laundry room on the main level, as well as exterior lighting and ceiling fans.
A home with Energy Star rated appliances is important to all generations as well, but millennials rank this feature as 10th most wanted, while most baby boomers rank it as first or second.
Millennials are increasingly choosing new homes over older resale homes. Because they lived through the recent recession with many completing college and attempting to enter the workforce right at the height of the recession, this group is typically financially conservative. So, why are they buying new homes?
One likely reason is that they’ve waited longer to purchase a home than previous generations, some waiting until their 30s to purchase their first home. They know better what they want, and they know they can get it in a new home.
They’re looking for customizable homes that are still affordable.
Millennials want outside space and lots of it. Out of all generations surveyed, millennials were the only group to rank three outdoor spaces in their top 10 list: a patio, a deck, and a front porch.
Millennials (and Gen Xers) want more space than they currently have in their homes, while baby boomers and seniors are content with their home size or even want to downsize some. Millennials are looking for homes with more than 2,300 square feet, while boomers and seniors want homes with less than 1,900 square feet.
Every generation seems to agree that three rooms is an acceptable minimum, but but baby boomers and seniors feel three rooms is also an acceptable maximum, while millennials and Gen Xers are more attracted to four or more bedrooms in a home.
Most buyers (64%) prefer single-story homes, but this trend is driven by older buyers. When you look at the numbers, only 35% of millennials find single-story homes to be an important feature in a home while 75% of boomers and 88% of seniors prefer single-story homes.
A high 77% of millennial home buyers are looking for homes with basements, while only half of boomers find basements to be appealing.
Surprisingly, most homebuyers in all generations prefer to live outside the city center, with only 8% choosing city life. Two-thirds of all buyers, including millennials, prefer the suburbs while over a quarter prefer more rural areas. It seems millennials are drawn to newer homes in the suburbs for more space at a more affordable price.
These trends are important to watch, as more and more millennials enter the home buying market. In fact, at 32% of the total home buying market, their preferences and home buying trends will continue to influence the real estate market for years to come.
About the author: Shay Wright is a real estate blogger living in the Austin, TX area. Real estate has always been one of Shay’s passions, and he loves reading, writing, and talking about anything real estate related.