The Millennials Are Here – What You Need to Know
Dear Readers,
For the past five years we have been hearing about the coming wave of the Millennial Generation. Like the Baby Boomers, they make up more than 80 million people in the U.S., which is double the size of my cohort, Generation X. The big fear was whether Millennials would build homes like those before them, or would they take a different path, renting the rest of their lives – creating a “Renter Nation.” Gene Myers, founder of Thrive Home Builders in Denver, set me straight by pointing out that, “All generations will want the American dream of homeownership.” He was spot on, as this month Zillow® reported in the findings of their latest study (also thoughtfully reported by John McManus at BUILDER magazine, which is a feature article of today’s newsletter).
Zillow now reports that 50% of all U.S. homebuyers are Millennials. Moreover, 48% are considering new construction vs. a resale home… amazing data.
- Half (50 percent) of today’s home buyers are under the age of 36, and 47 percent are first-time buyers. Solo home buyers are in the minority; most buyers are shopping with a spouse or partner (73 percent).
- Eighty-three percent of buyers are shopping for a single-family house. Their top considerations are affordability and being in a safe neighborhood.
- Fifty-two percent of buyers consider renting while they’re shopping for a home—a number that’s even higher among younger buyers.
- Seventy-five percent of buyers hire a real estate agent during the buying process.
- Across all generations, almost nine out of 10 buyers (87 percent) use an online resource at some point in their search for a home to buy.
- Millennial home buyers share many concerns and preferences with their grandparents’ generation, both choosing homes with shared community amenities and considering townhouses at higher rates than those ages 35-49. However, Millennials’ home-buying process is significantly different from their grandparents’ process.
- Millennial home buyers wait longer to buy a first home than previous generations. The modern-day “starter home” is nearly as large as the median home for “move-up” buyers, and costs about 18 percent less.
- Millennial home buyers undertake far more social home searches, seeking input from friends, relatives and neighbors 58 percent of the time, versus the Silent Generation, who poll friends just 37 percent of the time.
- More than a quarter (26 percent) of buyers find an agent online. A third (33 percent) find an agent through a personal referral.
- Millennials scrutinize more agents, asking friends and family about their experiences with agents and reading online reviews more than other generations.
- When it comes to choosing an agent, Millennials and other generations share their top priority: a sense that an agent is trustworthy and responsive to their needs.
- The average shopper goes on seven home tours, and while they may incorporate online research, they tend to be hands-on at decision time, preferring to meet an agent in person or talk on the phone, and prioritizing private tours of homes led by a professional.
- Only 46 percent of buyers get the first home on which they make an offer, reflecting the reality that in today’s tight market, the search—which takes an average of 4.2 months—comes with competition and disappointment.
- Over half of buyers (56 percent) save up for a down payment by setting aside a little money at a time. Almost a third (32 percent) use more than one source for their down payment, including gifts and loans from family, selling stocks and bonds, and cashing in retirement savings.
Happy Building.
Yours truly,
Paul