What can sellers do to appeal to Millennial home buyers? Karen Lawson of LendingTree looks at what members of Generation Y want from their new home and why sellers should market to those desires.
Millennials (loosely-defined as those individuals born between 1981 and 1996, also known as Generation Y) face obstacles to home ownership that their Baby Boomer or Gen X parents did not. The Brookings Institution reports that Millennials will account for one in three adults by 2020 – a force to be reckoned with. However, the National Association of Realtors® reports that although the “leading edge” Millennials aged 25 to 34 want to buy property, they can’t without stronger job markets and a wider choice of affordable residences.
Challenges Faced By Millennials
The main hurdles faced by Millennials are affordability, jobs, and inventory.
Millennial home buyers face a double threat of low wages and staggering student loan debt. According to a report by the Economic Policy Institute, student loan debt grew by an average of six percent annually between 2008 and 2012. High levels of student loan debt can make it impossible to qualify for a mortgage, and as property prices rise, owning a home becomes a moving target.
The Economic Policy Institute reports that 2013 college grads earned an average annual salary of $34,500; this was the lowest average pay since 1998. Which areas are most affordable for these grads? The National Association of Realtors® named Austin, Texas and Salt Lake City, Utah among areas with “relatively affordable” properties.
Millennial buyers face subdued (but improving) job markets, and the available jobs are likely to come with fewer employer-paid benefits like health insurance and pensions. Employees who pay for these things themselves have that much less cash available to buy homes. The National Association of Realtors® identified Austin and Dallas, Texas and Grand Rapids, Michigan as cities with the strongest job growth within metro areas identified as attractive to Millennials.
The National Association of Realtors® reported that the Ogden and Salt Lake City, Utah and the Minneapolis-St. Paul Bloomington MN-WI metro areas had the highest increases in available houses between May 2013 and May 2014. Wherever Millennials look for their next homes, they prefer a good selection of properties and neighborhoods to choose from.
Millennial Home Buyers: Savvy Shoppers
Millennials have morphed from shopaholics into careful consumers: Bloomberg-Businessweek reports that today’s Millennials are responsible and resourceful buyers who no longer deserve their earlier reputation as tech-toy-crazed materialists. The Great Recession changed all of that.
According to Bloomberg, Millennials currently spend about $200 billion a year and make up about 25 percent of the workforce; by 2020, they will comprise the majority of the workforce and their spending will double.
The National Association of Realtors® says that Millennials value their neighborhoods as much as their homes. Millennial home buyers prefer open single-story floor plans, wood or tile flooring and environmentally-friendly “green” features.
Millennials shop online for everything — including homes. In addition to searching the web for homes, Millennials can educate themselves on every step of the home buying process and even get personalized mortgage rates online.