Are you a Realtor or mortgage broker and you're wondering how your clientele will shift over the next one, two, or five years? I’d like you to meet the Millennials, the demographic that’s on the cusp of dominating our population and society – including real estate.
With 83.1 million adults between 18 and 34 years old (born between 1981 and 1997,) Millennials are the largest demographic in U.S. history. They also make up about ¼ of our total population and are projected to make up ¾ of our entire workforce by 2025, or 53.5 million workers.
The common myth over the last five years was that Millennials delayed home buying. But in fact, they constitute close to one-third of all home buyers now, and represent a significant 68% of first-time homebuyers.
Today’s share of home buyers includes 42% Generation X (34-47 years old), 29% Baby Boomers (48-66 years old), and only 29% of Millennials (18-33). (Other data as recent as 2016 has them account for 34% of all home buyers.
50% of Millennials rent on their own,
Only 26% own their home, condominium, etc.,
21% of Millennials still live with their parents,
and 3% live in military or student housing.
But even though Millennials are taking longer to buy a home than generations prior, that doesn’t mean they’ve dismissed real estate ownership.
In fact, 65.3% of this 18-34 group associate home ownership with the American Dream, the highest percentage of any age group! (Interestingly, the 65+ age group was next highest at 63.9%)
In fact, 33.2% of Millennials expect to buy a home within the next 3-5 years, and 91% expect to own a home some day!
What’s holding Millennials back from buying a home?
40% of them are saddled with student loan debt, and the average college graduate with student loans now has more than $29,400 in debt.
In fact, 54% of Millennials cite student loan debt as the biggest obstacle to buying their own home.
Income and a steady job is an issue since 10% of millennials are unemployed, which is almost 4% higher than any other age demographic!
Speaking to that, saving the money for a down payment is the biggest challenge for 23% of Millennials, compared to 13% of all home buyers.
62% of Millennials have less than $1,000 saved, and 21% have nothing saved.
(However, 73% of Millennials are unaware of low down payment options, such as FHA loans.)
Ironically, it’s the high cost of renting that’s keeping many Millennials from being able to save a down payment!
It’s also a lot harder to pool their resources as a couple since only 26% of Millennials are married, which is 10% from the same age group in the past.
This age group is also lagging when it comes to credit score, with an average score of just 624.
What do Millennials want in a house?
According to surveys, the 18-34 age bracket has distinct priorities and needs.
75% of Millennials want a single-family detached home,
11% want a townhome,
4% want to live in a muti-family unit,
and only 3% to live in a manufactured home.
Additionally, 84% of Millennials want 3+ bedrooms, 52% want a 2-story home, only 35% look for a single-story home, and 12% are OK with a split-level home.
46% want a luxury kitchen,
47% want solar panels and efficient energy storage,
75% want new appliances in the home they buy,
and cell reception and fast internet are more likely to influence their decision to pick a certain house.
The top features they look for in a home:
• Laundry room
• Exterior lighting
• Energy-efficient appliances
• Storage options
• Living room
• And front porch
They also want homes they can move right into without fixing or alterations.
For that reason, 48% of Millennials are likely to buy a newly constructed home to avoid renovations or plumbing/roof/electricity problems, compared to 34% of all buyers.
Where Millennials want to live might dispel the perception of large scale urban living, too. In fact,
49% (just about half) want to live in the suburbs,
21% do look to buy in an urban area,
17% want small town living,
13% are looking to live in the country or rural area,
and 1% want to live at a resort (don’t we all!)
They also look to reduce their commute times, with 65% of Millennials saying that a convenient location – even the ability to walk or bike to work – is a big plus.
When it comes time to search for a home to buy, Millennials look online more than any other age bracket (99% compared to 95% for all buyers), and 58% find a home via their mobile device (46% for Gen-Xers, and 33% for Baby Boomers).
But Millennials are also the demographic most likely to purchase a home through a Realtor, with 90% of them using a licensed Real Estate agent.
They’re also more likely to sell faster. In fact, Millennials keep their home for an average of 6 years, far less than the 10-year average for all homeowners.
Only 11% of 18-34 buyers define homeownership as permanent, and 68% see their current home purchase as a stepping-stone towards their dream home (compared to 36% of all buyers).