Millennials want to live in the city center in urban neighborhoods that are close to the action. They want to Uber, Lyft or walk to their favorite restaurants, cafes, and coffee shops. Even more importantly, Millennials want to live in mixed-use developments, where they can walk to work, which is a much sought-after amenity in urban centers.
Millennials are a driving force in the housing market, a trend that affects both home sellers and buyers. Millennials prefer to rent over buying a house, and the number of homeowners in this demographic is decreasing.
It may appear that Millennials are fickle and flighty in their home buying habits, but this is not the case. Millennials are making investments in the housing market and will continue to do so.
The median age of a first-time homebuyer is currently 36 and there were an estimated 11.8 million first-time homebuyers in 2016. In fact, millennials are collectively responsible for 76% of home purchases and 43% of home purchases were made by people under the age of 34, with an estimated income of $60,000.
What Motivates Millennials to Buy Homes Today?
After years of splurging on exotic travels and fancy restaurants, millennials who are often known to choose experiences over possessions are now snatching up large assets such as cars and houses.
This trend, which started in 2019 right after the global pandemic forced people to stay home and practice social distancing, drives up the home prices and incites developers to create multifunctional and community spaces with modern and sustainable elements.
Millennials, i.e., those born between 1981 and 1996, are buying homes later in life than previous generations. Experts believe that the pandemic and the emergence of work-from-home arrangements prompted them to buy properties. The remote work arrangement also allows millennials to leave expensive cities and relocate to a cheaper neighborhood.
While the previous generations snatched up homes in their 20s, this was not the case with millennials who have been burdened by student debt, the financial crisis followed by housing market collapse, and ultimately the tighter credit standards that made it difficult for many young borrowers to qualify for loans. But with these “frictions” now starting to ease, they are finding it easier to purchase their first home.
Currently, more than half of the US total population are members of the millennial generation or younger, numbering around 166 million or 50.7% of the population.
How is the Millennial-Driven Demand Affecting Homebuyers and Sellers?
More than any other generation, millennials are slow to grow up. That isn’t just a figure of speech, either. According to a recent survey by the Demand Institute and Nielsen, this generation of young professionals is a quarter-century behind schedule. “Millennials are delaying major life events as well as major household purchases,” the report concluded. “Their lifestyles are also different from previous generations.”
The Millennial generation is currently the largest generation in the U.S., and it is only going to grow as the oldest Millennials continue to age. This is important when it comes to the housing market, because Millennials are both the largest generation and the generation that is most likely to move to a new home.
Millennials are also driving demands for different types of housing than other generations have. In fact, many of the most popular types of housing today are the result of millennial preferences.
Work with a Real Estate Professional
Whether you’re a homebuyer or seller, the rising demand for home properties has an impact on your game plan, and so it’s important that you work closely with a real estate professional who has an in-depth knowledge of the local housing market.
While a “hot market” gives home sellers more power at the negotiation table compared to homebuyers since the supply far outweighs the demand, it remains important to come up with a reasonable asking price, which an experienced real estate specialist can help you with.
The asking price works like a marketing tool in which the goal is to attract as many buyers as possible. When you have multiple potential buyers, you have more negotiating power as a seller, which could drive up the price of your home.
In contrast, a home with an asking price that’s too high–i.e., compared to similar properties that have been sold in the past six months and were located in the same neighborhood or geographic area–may stay too long on the market, much to the detriment of a seller’s bargaining power.
A home that sits too long on the market also means extra expenses that include home property taxes and homeowners association (HOA) fees.
And for homebuyers, a hot market could mean paying higher than the asking price so they won’t lose out against other buyers trying to snatch up the same home they have their eyes on. Nonetheless, working with a real estate expert can help you come up with a plan that doesn’t necessarily include going above your budget.
A Final Word on Millennials and the Current Housing Market
I hope this blog post has been helpful in providing you with more information about the housing market and how millennials are driving the demands in the industry today.
If you’re a millennial looking to buy a house, you should contact me as soon as possible. I can help you navigate the current market and find the home that is perfect for you. If you are getting ready to sell your home, it’s a good idea to reach out to a real estate professional to help you get the most for your home.
As a qualified realtor and real estate specialist who has already helped hundreds of homebuyers and sellers in the Bay Area, I can give you pricing advice and help you with the pre-negotiation homework and paperwork.
To learn more about how you can take advantage of the most current trends in the housing market, call me at (408) 406-6035 or Schedule A FREE Consultation. I would be delighted to help you make the best decisions for your real estate needs.