Over the next decade, the number of households in their 30s will increase dramatically. According to Harvard University’s Joint Center for Housing Studies, the increase will be about 2.7 million households. These are the members of the Millennial Generation.
Millennials, also known as Gen Y, are defined as being those born between the early 1980s through the early 2000s. There is some variety in the exact years this generation begins and ends depending on which study you see. This is a large demographic, which includes the children of the Baby Boom generation. Millennials are also called the Echo Boomers for this reason.
Millennials have some common traits as a group. One is that they are waiting a bit longer to purchase homes. Many are renting, but a very large number are still living at their parents’ homes. This is because their student loan debt is higher, entry level incomes are falling and professional jobs are a bit more scarce for those without a specialized or advanced degree. Another reason for waiting to purchase a home is their experience with the recession. They watched as parents struggled with job loss or were forced to leave a home due to foreclosure. It may be awhile before these buyers feel comfortable with the long term financial commitment of a mortgage.
Millennials are also thinking differently about location and what type of home they will choose to purchase when the time comes. Their tastes are more urban. This group would prefer a smaller, functional home close to a city center, shops, restaurants and public transportation than a large, sprawling home with a big yard to maintain and the necessity of getting into a car to go everywhere.
This group will be interested in homes that reflect their individuality. They would prefer an area with many different home styles rather than a development with similar-looking homes. Wasted space is another turn-off. If they are purchasing a home they won’t be interested in a formal dining room and living room that will only be utilized occasionally. The preference will be for an office area and/or home theatre that will get regular use. Upgrades will not impress them unless they are to save energy or are for technology – for example, a TV in the sleek, functional kitchen would be preferable to a large kitchen with extra prep sink and multiple ovens.
Don’t forget that cell service! Millennials use their phones and hand-held devices for many purposes and are socially connected all the time. A home in an area without good cell service won’t work for these buyers.
Millennials will be a strong presence in the housing market once their incomes begin to grow. They are already making an impact in the rental market nationally. If you are a Millennial working toward purchasing your first home, or you are a Boomer thinking of downsizing and would like to take advantage of this large market in the next few years, check in with your REALTOR of choice and start to prepare!