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Have Millennials Ruined Real Estate Too?

Should real estate join Applebees, big box stores, and football on the long list of things that millennials have killed? The answer is, as is the case with many of the other industries, products, and lifestyle habits that they’re accused of ruining, of course not. In fact, millennial homeownership is on the rise. Millennials are now a dominant demographic in the housing market, constituting 34% of all home buyers and 66% of all first-time buyers.

Who are millenials?

The rise of millennial homeownership has spurned interest from realtors who want to know what kinds of homes millennials want the most and how best to market to this demographic. Millennials evade concrete definition; they are characterized in popular media by a combination of age (born between the early 80s and the late 1990s), political inclination (ostensibly liberal), and diet (avocado toast, artisanal donuts). For all intents and purposes, when speaking about real estate, we’ll use the same criteria employed by the National Association of Realtors, which is that a millennial is anyone under 36. 

Millennials are characterized as “late bloomers” with commitment issues—they wait longer to have kids, to get married, and to buy a home. Once they own a home, they don’t intend to keep it; they keep their first home for an average of six years while other buyers average ten. Millennials have the worst student loan debt of any generation, so they don’t want a fixer-upper; they want their homes to be perfectly livable “out of the box” as it were. They don’t have time for renovations on weekends; they have one or two or six side gigs that they need to maintain.

How millennials have changed the real estate market 

Because of these unique circumstances, combined with the rising purchasing power, millennials have transformed the real estate market. The first blow dealt to the real estate market has been the decline of rental markets. In November 2017, the Wall Street Journal reported that while ownership was at its highest since 2014, rental companies reported stagnated profits in the third quarter. 

Millennials have their own criteria for buying a home; they want large kitchens and open floor plans. Sustainability is also more important to millennials compared to generations past, with 47% expressing interest in solar panels and other energy-efficient solutions that are both environmentally-friendly and cost-effective. At the same time, millennials prioritize new technologies and appliances; smart TVs, options for internet service providers, and updated kitchens and baths are of the utmost importance to them.

Another unique aspect of the millennial buyer is the presence of parents; as millennial jobs are increasingly precarious and millennials are saddled with up to tens of thousands of dollars in student loan debt, many rely on their parents for their down payment or their mortgage. Therefore, realtors are oftentimes not only faced with the task of marketing to millennials (who, as previously described, have their own unique criteria and expectations for a first home) but with marketing to their parents whose expectations are often completely different or even in conflict with those of their children.

Some aspects of buying a house have undeniably stayed consistent with other demographics. Millennial homeowners are still sticking to the suburbs, although they do enjoy being within a short commute from an urban core. Only 25% of millennial homeowners actually live in urban areas.

How to market to millennials

Millennials are true researchers. It’s second nature for them to sort through vast amounts of information provided by social media, search platforms, and blogs before making a minor purchase, let alone something as important as a house. Because of this tendency to research, realtors need to be ahead of the curve with their digital marketing strategy and emphasize aspects of the home that excel according to millennial criteria. Because millennials want homes to be perfect prior to purchasing, especially with regard to kitchen and bath appliances, it is of the utmost importance to renovate homes before listing them. Introduce smart technologies and energy-efficient solutions like solar panels prior to listing; that way, you can forefront the new perks and how they can be enjoyed. 

Millennials didn’t ruin real estate, but they are rapidly changing it with their new criteria that disparages fixer-uppers and prefers fully functioning, new, sustainable homes. Realtors should get ahead of the curve and adjust their marketing strategy accordingly, as millennials are poised to continue to gain purchasing power over the next decade.

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