Millennial Homebuyers: Everything Agents Need to Know
As a real estate agent, it’s important to realize that not all buyers are the same — especially when you’re talking about different generations.
Millennials, Boomers, and Gen Xers all come with unique needs, preferences, and buying styles. If you want to make sure they end up satisfied (and will refer you to others), you’ll want to customize your approach depending on which cohort they hail from.
To start, let’s look at millennial homebuyers. Here’s what makes them tick — and how they stand out from other buyers in more ways than one.
Millennials are ready to buy.
Millennials are 100-percent ready (and even excited) to buy a home. According to Apartment List, 80 percent want a home of their own — and it’s no wonder why. A recent study shows average millennials spend a whopping $93,000 on rent by the time they’re 30. They’re ready to get out of that rent race and start building their own equity — not their landlord’s.
And they’re starting to make moves. According to the National Association of Realtors, they now make up the single biggest share of today’s homebuyers at 36 percent. That number’s growing month over month, year after year.
Millennials aren’t your average first-time buyer.
Though many millennials are first-time homebuyers, don’t expect them to seem familiar. With higher incomes, more time to save, and a better feel for their future, many of these buyers are skipping the starter home altogether. They’re opting for larger, more expensive properties that are primed and ready for family life.
Put simply, they want a forever home.
They’re also not your typical married couple either. Many millennial homebuyers are single, buying with their unmarried significant other, or are even buying with roommates or friends. Some are also going in on multi-generational homes to build credit with their moms, dads, and grandparents.
Millennials have great credit and solid income.
Despite many saying millennials are irresponsible with their money (hello, avocado toast) or bad at saving, it seems millennials have pretty great credit. According to the most recent Ellie Mae Millennial Tracker, millennial homebuyers in some areas averaged a credit score as high as 757 last month (a score most lenders would consider excellent).
Most even qualify for conventional loans, too, with 68 percent using the more stringent mortgage product, rather than a low-down payment option like an FHA loan.
They also have seemingly more income than past generations. RENTCafe’s analysis shows that between age 22 and 30, the average Millennial earns $206K — nearly $11,000 more than Boomers in the same time frame. Though with significantly more student loan debt, that added income might not translate to more buying power just yet.
Millennials don’t mind getting creative.
Aside from skipping the starter home, millennials are ready to get creative in other ways, too. They’re more willing to commit to DIY projects and fixer-uppers (thanks, Chip and Joanna!), and they’re also the most likely generation to look at foreclosures when searching for a home. They also buy brand new properties less than other generations, with just 11 percent buying new in 2017.
Millennial homebuyers want help.
Though you’d think their digital nature would push them toward fully online home purchases, it turns out millennials are more traditional than expected. According to the National Association of Realtors, a whopping 90 percent of millennial buyers used a licensed real estate agent last year — less than the average of 87 percent across all generations.
Millennials like tech hubs and culture.
As far as location goes, millennials are attracted to technology hubs and places with lots of activity. As Realtor.com’s study recently put it, places where they can “make good money and still have a good time.” Some of the more popular spots they’re flocking to include San Francisco, Washington, D.C., Dallas, and Houston.
Millennial homebuyers like being near friends and family.
In another more traditional move than you’d expect, millennials are also more likely to consider the location of friends and family when buying a house. A recent report from NAR shows that 43 percent of millennial buyers count “convenience to family and friends” as a major influencer in where they’d buy a home. This is nearly twice the rate of Gen Xers who said the same.
The Bottom Line
As you can see, millennial buyers aren’t necessarily what you’d expect — nor are buyers from any other generation. But being in tune with these unique nuances and differences is what can help you deliver 100-percent satisfaction to each customer — not to mention set you apart from other agents on the market.
Want another way to make those millennial buyers happy? Then refer them to a lender who gets what they’re about. Contact Embrace today to connect with a loan officer who can help your buyers achieve their dreams.