REALTORS®: Understanding Millennial Home Buying Trends
There is no denying that the real estate landscape has changed in the past few years. One of the biggest driving forces behind these changes is the millennial homebuyer.
In fact, according to the latest data from the National Association of REALTORS®, younger millennials make up a whopping 70% of all first-time homebuyers nationally while 46% of older millennials were first-time home buyers.
Millennials are known for being tech-savvy and for having different priorities than previous generations.
These factors have led to changes in the way that homes are bought and sold. If you are a real estate agent who is looking to appeal to this demographic, then you need to know what makes them tick.
Keep reading to learn more about millennial home buyer trends and what you can do to appeal to them!
How millennial buyers 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 their mortgage and home insurance options, and 35% saved up at least $2,000 for potential emergency expenses.
- Millennials used mobile devices nearly twice as often as the Silent Generation
- Open houses were used most by Gen X, followed by Older Millennials
- Forty-four percent of Gen Xers used yard signs for their search
- The Silent Generation used online video sites nearly twice as often as Millennials
Additionally, new data from Realtor.com shows that 68% of millennials were 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
Today’s homebuyers are doing things differently than their parents and grandparents.
They’re staying single longer, marrying later, and waiting for children, with less than a third of millennial home buyers citing a child in the household or improving their child’s life as a top reason for buying a home.
However, thanks to technology, they have more information and options at their fingertips than any previous generation.
Here’s a look at how millennials shop for homes and what you can do to appeal to this large and powerful generation of buyers.
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%).
By far, the biggest way to reach these prospective buyers has been by real estate social media posts.
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 homebuyers 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 34% are looking for a place to have kids or improve their existing children’s lives. So space, outdoor areas, good schools, and neighborhood safety are all important to these buyers. Nearly 59% 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 and 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 buying a home
According to the most recent data, the top 10 cities for millennial homebuyers are:
- San Jose, CA
- Denver, CO
- Boston, MA
- Seattle, WA
- Austin, TX
- San Francisco, CA
- New York, NY
- San Diego, CA
- Los Angeles, CA
- Washington, D.C.
San Jose, which topped the list, 63.57% of mortgages were offered to millennials. The average age was 33.01 years old.
Some other interesting tidbits from the report? About 40% of recent buyers were single; 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.
For further research, 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.
The bottom line on millennial home buying trends
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 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.
