Much is made about how millennials are so different from the preceding generations. It seems a new article is posted each day decrying their responsibility in killing a long-standing industry. So much so, Business Insider has a list of industrial homicides the generation has committed, including Applebee’s, real estate, “big napkin” and beer. One is left to wonder, “Will they kill again?”
We have good news for all the mortgage lenders, banks and realtors reading along. Millennials, much like each generation before them, prefer to live in houses.
1. Millennials Comprise the Largest Group of Homebuyers.
While many financial and real estate industry mouthpieces have made assumptions about millennials’ lack of participation in the economy, the generation has quietly overtaken Generation X as the largest group of homebuyers. Software company Ellie Mae reported 45% of homebuyers in January of 2017 were millennials. And the National Association of Realtors reported people 36 years of age and younger have made up the largest share of homebuyers for the past four years.
It’s worth noting that Millennials outnumber Generation X by 11 million, according to the U.S. Department of Health and Human Services. The size of the generation matters.
2. Most Millennials Haven’t Reached Home Buying Age.
Maybe more shocking than the realization that millennials are the largest group of homebuyers is the fact that most millennials haven’t even reached the median age for first-time homebuyers. For the past four decades, the median first-time homebuyer has been around 31 years old.
Older generations can complain about millennials’ inability to grow up and move out all they want, but the fact remains that two-thirds of millennials haven’t reached the age when most in Generation X bought their first home.
3. A Growing Market
As these millennials age into home buying age, how will it impact the market. Well, Harvard’s Joint Center for Housing Studies predicts millennials will form 20 million new households in the next seven years. That is a marketplace you’ll want to be sure to compete in.
Lenders would be ill-advised to overlook the youngest generation when it comes to marketing their services. Not only should they be respected, they should be sought after.
4. Millennials Are Renting Longer—But Not Much
We assume millennials are only renting and not committing to buying a home. The average length of time that someone rents before buying their first home actually hasn’t changed much over the years.
Millennials renting their residences are doing so for a median of six years before making a home purchase, according to a recent Zillow report on first-time homebuyers. That’s only one year longer, on average, than in 1980 when first-time homebuyers rented a median of five years before making their first home purchase.
5. Ownership Means Control
To a majority of millennials, whether renters or homeowners, owning a home means more control and more security, according to Fannie Mae.
In fact, half of new homeowners stated having a place to call their own as their primary reason for purchase, according to the National Association of Realtors.
6. They’re Buying Homes for Their Dogs
Surprisingly, a leading reason for millennials to buy a home is to provide their dog with a spacious backyard. A recent survey from Harris Poll and SunTrust Mortgage found 33 percent of millennials who bought homes did so because of their dogs. More than 25 percent said they moved because of marriage, and 19 percent moved because of the birth of a child.
7. Help Wanted
Most millennials are uninterested in diving into the home buying process alone. The overwhelming majority (92%) enlisted the help of a realtor in purchasing their home. And most of those who used an agent (52%) found the agent through a referral from a friend or family member. No other generational group relied as heavy on word of mouth.
8. Online Isn’t an Option—It’s Key.
Virtually every millennial who bought a home in 2017 first shopped online and 58% of them used a mobile app or device to find their realtor, too. This means realtors and lenders need to be ready to advertise online and on mobile.
9. They’re Not as Different as You Think.
As strange as millennials seem to older generations, when it comes to home buying, they’re not that much different. The majority of millennials buying homes are married couples seeking a home in the suburbs. More than a quarter purchased their home in 2017 because of a life change like getting married or the birth of a child.
Of those millennials who purchased homes last year, two-thirds prioritized neighborhood quality and proximity to their workplace.
Three Takeaways
1. Yes, They Go Online
Millennials, almost as a rule, go online first. Whether they’re shopping for clothes or for a house, this generation researches online before pursuing a purchase in person. You must not only have an online presence, but your online experience better be great. Without complete listing information, helpful guides, and good photography, you’ll be overlooked.
2. Be Used to Handholding
Millennials are just now aging into prime home buying years, meaning this is going to be a first-time experience for most of them. You have a hell of an opportunity to be the first person to help a millennial buy a home, and build lasting relationships in the process. Here is one way we’ve helped our clients make millennials more comfortable through the uncertain home buying process.
3. Personalize Your Service
Millennials, after going online, most often contact a realtor for help. This is a generation that expects quality personal service, so be ready to interact with them. They expect an authentic, hands-on experience.
It’s easy to make assumptions about millennials or pile on with other accusers, but millennials are only going to command more of the marketplace’s buying power in the coming decades. It’s time for marketers and lenders to stop treating millennials like a fun new demographic and start seeking to understand the generation.
