Some people think that Millennials—the generation born roughly from 1981 to 1997—are destined to live at home with their parents forever, or at least, long after graduating from college and securing full-time jobs.
As recently as 2015, Millennials were making 20% less than the generation preceding them. Economic setbacks stemming from the great recession have led to a variety of difficulties for Millennials.
But by 2020, Millennials are expected to make up half of the U.S. workforce. With many Millennials now either in or nearing their 30s, how will this generation approach the housing market?
Millennials Want to Purchase Homes.
According to a 2018 Bank of America Homebuyer Insights Report, Millennials want to purchase homes. In fact, Millennials are prioritizing home ownership above other life milestones, like marriage or children. The report also states that 74% of Millennials plan on buying a home in the next two to five years. A significant 94% of Millennials list their first two requirements for purchasing a home as having enough money and obtaining a more lucrative salary. Other motivating factors, like marriage and family, lag significantly behind.
Kathryn Menshaw, CEO and Co-Founder of The Muse, smartly points out some characteristics unique to Millennials:
Every generation brings something new… and Millennials are no exception. As a group, they tend to be highly educated, love to learn, and grew up with the Internet and digital tools in a way that can be highly useful when leveraged properly.
That leaves us with the question: How does growing up alongside technological innovations and the internet affect Millennial purchasing power?
From Realtors to Mortgages, Millennials Purchase Homes Differently.
Millennials expect an app for seemingly every process. Issuing invoices, taxes, traveling and even ordering groceries have become more simplistic with the emergence of mobile-friendly platforms. Millennial shop and compare nearly everything they purchase online, and mortgages are no different.
Morty instantly matches buyers with competitive rates and products, and then closes the loan for you. Morty allows homebuyers to experience the mortgage process in a streamlined and pain-free manner. Tech has infiltrated nearly all aspects of the home buying process. Thanks primarily to the demands and needs of Millennials, paperwork, unclear procedures, and confusion can now be easily avoided.
Millennials have grown up in an era in which social media provides instant communication, interaction and gratification. Recommendations have taken center stage with Yelp, Google reviews, Facebook reviews, and other platforms. For Millennials, purchasing decisions have become dramatically influenced by the experiences of others.
Perhaps unsurprisingly, Millennials are most likely to seek a Realtor on recommendation or referral. The preferences Millennials bring to the homeownership process are going to impact the real estate industry significantly, as the industry transforms for a more technologically-conscious age.
Entitled and Lazy, or Financially Literate and Pragmatic?
Many Millennials prefer to choose a place of work with demonstrated corporate social responsibility methods in place. They’ve put their career and establishing themselves financially before marriage and children. Excessive student loan debt and slow wage growth may have inhibited this generation’s purchasing power for a short while. But it seems hard work, dedication, and a new perspective is what it takes to overcome.
Millennials place homeownership above other significant life priorities. In fact, homeownership is second only to being able to retire. Millennials may have gotten a bad rap for living at home with their parents. But many were merely trying to cope with an unfortunate economic situation. These efforts cannot be defined as lazy. Instead, they demonstrate an interest in and development of financial literacy. With such a monetary-minded generation, we can expect Millennials to approach the housing market with unique needs.
Onwards and Upwards
37% of Millennials plan to buy a house independently of a partner or family. And no area of the United States is immune to this influx and interest of Millennials in the housing market.
A 2017 U.S. Census Bureau Current Population Survey reported that despite coming of age in a slow job market and experiencing the highest student loan debt in history, homeownership among Millennials is rising in all U.S. cities, regardless of size.
Millennials are nothing if not resilient. Having demonstrated the ability to not merely survive but grow in a difficult economic time, the future of homeownership for Millennials is looking bright.