Get to Know the Millennial Homebuyer
If you’re a real estate agent, then millennials likely account for a big chunk of your client base. In fact, according to the latest data from the National Association of REALTORS®, millennials make up a whopping 38% of all homebuyers nationally.
Older millennials alone — those aged 30 to 39 — make up a full quarter.
Clearly, understanding these buyers will be critical to success in the coming years. Do you have a good handle on who millennial buyers are and what they want? Let’s dive into the data.
How millennials prep for a home purchase
According to a new study from insurance marketplace The Zebra, millennials are the most financially prepared cohort when it comes to home buying. A whopping 82% of recent ones saved for a down payment, 70% compared both their mortgage and their home insurance options, and 34% saved up at least $2,000 for potential emergency expenses.
Additionally, new data from Realtor.com shows that 68% of millennials have been able to save more thanks to shelter-in-place orders. Despite this, 45% still plan to get help from family or friends when buying a house.
How millennials shop for homes
As for the shopping process, millennials lean heavily on digital tools. They browse online listing platforms, pore over listing photos and videos, and in many cases, even drive by properties and check out neighborhoods in person.
In addition to shopping solo, millennials are also bringing in agents for help and expertise. Zebra’s data shows that 72% of recent millennial buyers hired a real estate agent. (Gen Z buyers only hired one 61% of the time, while Gen X was slightly higher at 67%).
Still, even with help, millennials find the home buying process stressful — more so than both Gen Z and Gen X buyers. Zebra’s analysis calls them the “most financially prepared generation and the most stressed out.”
What millennials want in a property
Zebra’s data shows that more than a third of millennials buy a home to build equity and as a long-term investment. For these reasons, they’re largely looking for properties in up-and-coming areas, where home values are rising.
Another third are looking for a place to either have kids or improve life for their existing children. So space, outdoor areas, good schools, and neighborhood safety are all important to these buyers. Nearly 60% of millennial buyers have at least one child in their home.
Here are some more details about what millennials want in a home:
- Price: About 63% of all millennial buyers want a house under $350,000 — the current median home price in America. Only a little over a third want a house priced higher than this. Data from Ellie Mae shows that the average appraised value for a millennial-purchased home last month was $268,029.
- Location: Around half of millennials plan to buy a home within their same city, while 31% are heading for the suburbs. More millennials are moving to the suburbs than both the Boomer or Gen X generation, according to Realtor.com.
- Size: Millennials lean toward larger properties. More than a third of recent buyers bought a house with at least 2,000 square feet of space.
They’re also in need of home office amenities. Realtor.com shows that 75% of millennials have been working remotely since the pandemic began — and 63% of those? They plan to buy a home in the near-term.
Top cities for millennials
Mortgage technology provider Ellie Mae publishes a monthly “Millennial Tracker” report, which delves into the latest mortgage trends for millennials. It also highlights the U.S. cities where millennials make up the largest share of new mortgage borrowers.
According to the most recent data, some of the top major cities for millennial homebuyers last month were:
- Philadelphia, where 47% of all mortgage loans went to millennials
- Houston (46%)
- Minneapolis (45%)
- Chicago (44%)
- Denver (44%)
- Detroit (43%)
- Dallas (43%)
- St. Louis (43%)
- Baltimore (43%)
Some other interesting tidbits from the report? About 40% of recent buyers were single, and the average age was just under 32. The average FICO score was 739.
Loan-wise, the average loan amount for a millennial buyer was $212,399. A whopping 80% of buyers used a conventional loan, while just 16% used an FHA loan and 1% a VA loan.
The bottom line
Millennials could bring in a good amount of business in the coming years. So understanding what they want, where they’re headed, and what financial foundation they’re working with? That can only help your career — and your bottom line — in the long run. Want more help growing your business and bringing in new clients? Check out our real estate agent resources now.