Whether you think they're the next "greatest generation," or the potential downfall of society, there is no denying that the complex relationship millennials have with the housing market is causing a ripple effect across a variety of industries. The United States Census Bureau does not officially define any generation except baby boomers, so pinning down the exact age of today's millennials is difficult. It is generally accepted that millennials are those who were born between 1982-2004. To examine the relationship millennials have with the housing market, we'll look at those born between 1982-1994. These millennials are graduating college or have been in the workforce for years, and would traditionally make up the bulk of first-time homebuyers.
There is a common narrative that the $1.2 trillion in outstanding student loan debt, held primarily by millennials, is hampering their ability to purchase homes. While it is true millennials have more gross student loan debt and that debt represents a larger portion of their overall debt, the millennial generation is still saving at the same rate as the previous generation. So, why can't millennials afford homes? They can. They just don't prioritize home ownership as highly as other generations.
In this article we'll explore things that do motivate millennials in their search for the perfect home, and what you can do as a construction company, real estate agent, mortgage broker, or other home professional, to reach them.
They like to move it, move it
Millennials are becoming more and more career focused and less focused on just "finding a job." Maintaining geographic flexibility means millennials aren't limited to searching within a certain city for a job, but are searching all over the country, or even the world, for the best possible career opportunities. Maintaining the ability to move with less hassle is crucial in the search for the perfect career.
How to reach them: If you're a construction or real estate firm with a large geographic reach, considering making the transition for new homebuyers from one home to the next as easy as possible. Any additional flexibility you offer millennials will add value to the home buying experience.
They are socially conscience
Generally speaking, millennials place more importance on being environmentally friendly and technology savvy than previous generations. Millennials want their homes to reflect the environmentally friendly and interconnected side of their personality, and many feel current new construction homes fall short of meeting that demand. According to A Better Homes and Garden Real Estate (BHGRE) survey of 18 to 35 year olds, 77% of respondents believe updated technology is a home essential. Environmentally friendly and upgraded technology features are something millennials are willing to pay for in a new home, and value even more than square footage.
How to reach them: Builders should be selective about the products and upgrades they include in new homes. In areas with a dense millennial population, items like smart thermostats, energy efficient appliances, and smart locks can be very appealing to millennial buyers. If these features prove to be too expensive, a builder can promote the fact that new construction tends to be more energy efficient than older homes.
The down payment dilemma
After the recession in the late 2000's, many millennials mistakenly believe they do not the income or credit scores to qualify for a mortgage. The Harvard Center for Housing Studies recently estimated that approximately 50% of the 25-34 year old renters in the top 85 metropolitan areas have the income and credit scores to qualify for a mortgage today.
While a vast majority of millennials would qualify for a mortgage, they still face some tough economic factors preventing them from saving up a down payment. Many millennials mistakenly believe that a 20% down payment is required to purchase a new home.
How to reach them: Educating millennials about their down payment options is they key to reaching them. Many millennials want to avoid looking naive, and do not ask about down payment options. As a builder or lender, target your marketing and advertising content towards educating millennials about various down payment assistance programs and methods.
Millennials are more interested in technology and how it can be applied to better their own lives, and society. Their love for technology doesn't necessarily mean they shun personal connections when searching for a new career or home.
Millennials will often ask friends and family members for recommendations on anything from builders to real estate agents and mortgage brokers. The medium through which they ask for these referrals is often through social media as they can collect a larger sample set of data from people they trust most. That means when someone recommends your company, it could potentially be seen by thousands of people.
How to reach them: They way to reach millennials as they search for recommendations is complex. There are a few methods to ensure your company reaches millennials early on in their home buying process.
- Ensure your online reputation has no major flaws. Your company's online presence, from social media to review sites, should have no major flaws or incidents. Bad reviews will exist, but it's how you react to them that can influence millennial buyers.
- Establish a referral program and incentivize first-time homebuyers to refer other first-time buyers to your company.
- Don't wait for millennials to find you, go find them. Join local, city-based Facebook groups and watch for people seeking recommendations or recommending your company. Engage in these conversations and be sure to follow-up properly.
- Run targeted social media advertising with valuable home buying resources targeted at millennials. Social media advertising is a great way to reach specific age groups in specific geographic regions who are interested in purchasing a new home. Your advertising will likely have more success if you provide valuable resources, as opposed to overtly advertising your services.
Try and try again
The widely held belief that millennials are not able to purchase homes is not holding up to the truth test. They may be purchasing later in life, under tougher financial circumstances, but according to Redfin, millennials make up 34% of everyone who has purchased a home over the past two years.
The above information hopefully will help you understand the complex relationship millennials have with the housing market. We hope you're able to put these tips to work to reach millennials.