Millennial Home Buying Is On The Rise

Millennial home buying trends are changing. For many millennials, buying and owning a home once seemed completely out of reach. But this year, more and more young people are flooding the real estate market as first time owners across the country. In fact, according to the National Association of Realtors, millennials made up 34% of the real estate market in 2016, with 66% as first time homebuyers. But it’s been long time coming.

Millennial home buying is a relatively recent phenomenon. In the past, first homeowners used to average about 26 years in age. Now, the average age for a first time buyer is closer to 33. This means the millennial generation is waiting an average of seven more years to buy their first home.

Why the delay in millennial home buying?

There are many reasons that can explain why many millennials buying homes is only just really starting to happen in the past year or so.

One major factor is the recession. Many millennials found themselves graduating from university and looking to launch their careers in a time of poor job market. As a result, many moved back home with mom and dad, as opposed to into an apartment either independently or with friends. This is often a fundamental step between living at home and home ownership. For many millennials, this phase of adulthood was delayed. (Approximately one third of millennials still live at home).

The recession also caused millennials to observe what was happening with older generations, creating a lack of confidence in home ownership prospects for themselves. Many people in older generations either lost jobs, or took jobs that paid less. And many had a difficult time selling their home. This sense of economic decline did not help to accelerate millennials into home ownership.

Financial woes

Personal finances are another reason millennials have been slower than previous generations to break into the real estate market. The average amount of student debt across the country has tripled in the past two decades. This means young people of this generation don’t have money to buy homes the way that older generations once did.

In fact, millennial home buying behaviors indicate that finances are something millennials worry most about when it comes to buying a home. The two primary financial concerns are coming up with a downpayment. This is followed by actually being able to find a home that fits their budget.

A tricky market

It’s a tricky market for millennials to break in to. Many are first time buyers, and are therefore competing against repeat buyers who have more leverage and real estate experience. There’s also a shortage of homes available across the country, creating bidding wars. This is particularly true with starter homes that are more likely to fit a millennial home buying budget.

Despite the seemingly dire outlook, however, there is one silver lining to the real estate market for this generation that is different to generations past: lower interest rates.

Why have millennials decided to start buying?

Millennials are finally breaking in to the real estate market because many are getting married and starting to have children. According to the National Association of Realtors, 49% of buyers 36 years old and under have children under the age of 18 living in their home. 66% of home buying millennials are married couples, and 13% are unmarried couples – the largest share of all generations. The median age of the millennial home buyer is 31 years old.

So, even though it took some time for them to get started, now, millennials make up 64% of first time homebuyers. This is despite the fact that they only account for 13% of the population. In January of this year, millennials made up approximately 45% of all purchase loans. This represents an increase of 42% from the previous year.

What are millennial home buying preferences?

There are some who are young professionals who want a turn key home that requires little to no work. But others are willing to find a place that will involve work over time. This would, in their mind, be a home that they can make their own and add value to.

Regardless of which of the two camps they fall into, millennial home buyers often lean toward similar features in a prospective home.

An updated kitchen and bathroom

Kitchens and bathrooms are the two hardest and most costly rooms of the house to renovate. Numerous sources of plumbing and major appliances make both rooms a major project to redo. Since millennial home buyers typically have a strict budget, they are more inclined to spend their money on a down payment and furniture as opposed to big renovations.

But don’t despair if you’re thinking that your kitchen may be out of date. As a seller, it may not be worth your while to redo these two rooms either for the sole purpose of selling. The fixtures in these rooms often come down to personal taste. Something you think looks good may not appeal to a new buyer anyway, making a costly and time consuming renovation potentially more of a hassle than something beneficial.

Open concept living

Spacious kitchens and open floor plans are also appealing to millennial home buyers. The kitchen has increasingly become the place for young families to hang out. Previous generations may have had a formal dining room as part of their real estate wish list. But millennials are more likely to gravitate toward a house that has a kitchen which can transition to a TV or living room. It’s also indicative of how millennials like to entertain larger groups or host gatherings. They prefer having guests ‘flow’ through the home instead of socializing in different rooms of the house.

A home office

More than 13 million Americans currently work from home. The rise of tech that allows employees to connect from anywhere, any time. As a result, more and more companies are becoming increasingly flexible with work from home days. Having a space in the house for being able to work quietly and productively is becoming more of a priority for millennial home buyers.

Hassle free home

In an ever more ‘disposable’ society, millennial home buyers are more like to replace rather than repair. Homes that are easy to maintain are highly appealing. Features like granite countertops and hardwood floors are often desirable. In addition to being aesthetically pleasing, they are also easy to clean.

But even if you don’t have these features in your home, don’t fret. The way you stage your home is critical to its success on the market. Even if your property doesn’t necessarily tick every box on the millennial home buying wish list, you can still stage it well. Being able to create an emotional attachment, and have your buyer envision themselves living in your space, is pivotal.

Staying connected

When it comes to a place to call home, cell phone service and wifi are both incredibly important to this generation. The priorities have shifted from previous generations, who may have asked about cable hook ups or a phone jack for a landline when viewing a property. Today, a home that is set up for tech is unanimously desirable among millennials. It’s true that internet and cell providers are not in a seller’s control. But real estate agents should be prepared to answer questions on this front regardless.

But before you even reach a point where a prospective millennial home buyer is asking you or your agent questions about the wifi set up, they probably saw the listing for your home online before even setting foot in your front door. The vast majority of homebuyers are now beginning their property search online. Having a compelling real estate listing with professional photographs is essential as a seller.

Good photographs and a descriptive listing is just the first step to selling your home to its fullest potential though. A custom marketing plan that targets the buyers most likely to take an interest in your home is critical. Understanding your millennial audience, and being able to market your home toward their needs and wants, will allow you as the seller to generate the maximum possible sales price for your home.

 

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Millennial home buyers in San Jose

San Jose is one of the top ten most desirable locations in the United States for millennials according to realtor.com.

The housing prices in the area are high. But the number of big tech companies in the area can be a key explanation for the incentive of this generation to live here. Young people flock to Silicon Valley to get to work in cutting edge tech. In San Jose, they can find industry specific career opportunities that aren’t as readily available in the rest of the country.

Downtown living combined with a suburban feel means that in San Jose, millennials can have the best of both worlds. It’s a huge draw for young first time homebuyers.

First time millennial home buyers in San Jose will often buy a condo or smaller home. They may plan to either sell it or rent it out within five to seven years, and move on to a bigger space as they grow their family.

Regardless of how soon you are thinking about selling, one thing is for sure: millennial home buying is on the rise, and more will be buying their first home now than ever before.

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