Move over Baby Boomers. The Millennials are now the dominate force in the U.S. housing market. The core group of Millennials is now reaching the 18 to 34 year age range. Not only are the Millennials the dominate force in the market, they are now the largest living generation in the country, counting 75.4 million according to the U.S. Census Bureau. Realtors, investors, and developers need to be paying close attention to this sea-change.
Sometimes labeled as “Generation X”, Millennials are now at an age when they are most likely to need a place to either lease or purchase. Many of them (or at least those who can afford to do so) are beginning to buy their first homes and invest in real estate for the first time.
Closely Targeting Millennials
Millennials now make up 32% of all homebuyers nationally. Here are some facts about Millennials that will help you target them as clients/buyers:
- Millennials are more difficult to please but can’t be ignored when 90 percent are using real estate agents.
- Difficult to please or not, 70 percent of buyers say they will use their agent again and/or refer to others.
- Between 45 and 50 percent originally found their agent through a reference from family or a friend.
- Millennials are heavily burdened by student loan and credit card debt. The average credit score is 625. This market segment is more likely to qualify under more flexible FHA-insured home mortgage loans.
- Don’t over look technology. Most of this generation prefers making contact through social media and texting. Still, 75 percent like to be contacted by telephone.
- Upwards of 94% of Millennials use online websites for home searches. 51% of Millennials later found the home they eventually purchased online first.
Revitalizing Cities with Brownfield Development
When you look at the research on Generation X, they’re not making decisions about where they’re going to live in four years. They’re making decisions about where they’re going to live for the next 12 months.
One developer in Olympia, Washington has taken the Generation X desire for urban living with easy access to amenities to heart. After an office supply building was heavily damaged by fire in 2004, the city purchased the 0.17 acre property for $300,000 with the intention of redeveloping the inner-city blight into a revitalized residential community. After reviewing bids, the city selected Big Rock Capital Partners to build a $3.5 million project at the site.
Big Rock Capital Partners is targeting Millennials by offering a collaborative workspace on the ground floor for entrepreneurs and young business professionals, while building small market-rate housing on the top two floors.
The Griswold’s building is among several properties in the city’s Community Renewal Area, where the city has expanded power to renovate by entering into deals with private developers.
What Millennials are Looking for in Their Private Space
When it comes to this generation, you’re not looking for customers for your products, you’re looking for products for your customers. Among the amenities preferred are:
- Open floor plans with fewer walls. They want space that can be adapted for work and social gatherings.
- Workspace can be substituted for the traditional dining room. Whether eating alone, with family, or with friends, the Millennials tend to eat on the go or while sitting in front of the TV.
- Millennials, along with other buyers in general, are moving towards energy-efficient housing, including energy-efficient cooling or heating systems. However, it is not among the top priorities in their preference list when affordability is a major consideration.
- This generation is inclined towards housing with lower maintenance. This can partially be attributed for the preference for shared maintenance of condos and apartment style living. For single-family houses, Millennials pay close attention to the HOA maintenance services or requirements.
- Never forget about the importance of technology for the generation that never knew life without the internet. Houses with excellent cell reception and the availability of high-speed internet service ranks high on Millennials’ priority list.
The Millennial Generation will be the driving force in the market for many years to come. Getting onboard early is a wise career move to make.
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Author bio: Brian Kline has been investing in real estate for more than 35 years and writing about real estate investing for 10 years. He also draws upon 30 plus years of business experience including 12 years as a manager at Boeing Aircraft Company. Brian currently lives at Lake Cushman, Washington. A vacation destination, a few short miles from a national forest. With the Pacific Ocean a couple of miles in the opposite direction.