What Do Millennials Want in a Home? Austin Real-Estate
November 30, 2017 | Badmin
What are Millennial home buyer characteristics is what this survey asked over 1000 millennials
This is an important question looking at the future of real-estate. Since the real estate sector becomes more focused on millennials, the market is keying in on an important question: what do millennials want in a home?
Its safe to say that to most millennials the concept of purchasing a home is paradox.
Homeownership rate for Americans under age 34 is near record lows at just 32.8%
Even though buying a home is traditionally associated with the “American Dream”, the homeownership rate for Americans under age 34 is near record lows at just 32.8%. In other words, millennials either don’t want to buy homes or they seem to want to, but various factors have been preventing them in doing so.
Waiting until later in life to start families is one commonly-cited aspect of the story, but millennials are also saddled with student debt and low wages, which have prevented from from amassing any significant savings.
Despite these factors, the demographic evidence is compelling – and many experts are expecting a shift in millennial buying behavior in the coming years.
WHAT MILLENNIALS WANT IN A HOME
Today’s infographic from Northshore Fireplace has an interesting methodology to help us get started in thinking about this question. In late 2016, they commissioned a unique study on 1,000 millennials, representative of all 50 states, in which respondents played a hypothetical game.
Each prospective buyer was put in the following situation: they are starting with an average American home (20+ years old, three bedrooms, and two baths), but have a $300,000 budget to choose between 38 hypothetical property upgrades to get them closer to the home of their dreams.
Here is how millennials chose to spend those budgets:
Millennials are Buying Their First Homes, and Here’s What They Want
Who is the Millennial generation? Authorities disagree on the exact birth years: for example, Pew Research defines Millennials as being born between 1981-1997 , the National Association of Realtors says 1980-1995 , and the US Census Bureau claims 1982-2000.
However, what we and all these sources can agree upon is that the Millennial group is the largest and most powerful demographic force in North America.
In the United States specifically, Millennials account for an entire quarter of the entire population with 83.1 million people in the demographic. This is a group that makes up the next generation of investors, continues to struggle with mounting student debt, they think about money differently, and now want to buy a home for the first time.
Marketers in all industries have tried to nail down the preferences of Millennials for some time.
Marketers in all industries have tried to nail down the preferences of Millennials for some time. Millennials have made things especially more difficult for the real estate industry, as they have delayed common life milestones such as marriage, having children, and home ownership. It is only over the last few years, as Millennials have started to buy homes in significant numbers, that the industry has truly understood what the group wants to see in a home.
Here’s their average profile: 29 years old, a median income of $76,900, and a typical home purchase (median) of $189,900 for a 1,720 sq. ft home. Of these buyers, 84% believe a home to be a good investment ; with millennial home buyers making up 68% of all first-time home buyers right now.
Where do Millennials want to buy?
So everyone wants to know where do Millennials want to buy? About half of the cohort (49%) wants to buy in the suburbs, while 21% would prefer to buy in an urban area. In terms of choosing a specific neighborhood, the most-cited factors affecting Millennials’ decisions were the quality of neighborhood (75%), convenience of getting to job (74%), affordability of home (58%), proximity to friends and family (49%), and quality of the school district (44%).
Today almost 30% of all home purchases are made by Millennials, yet many are still holding off on buying. The major reason for that is student debt, which over 50% cited as the biggest obstacle to home ownership. In fact, over 25% of all Millennials still live with their parents.
But what other reasons are cited for not owning a home yet?
They include but are not limited to: excessive debt, rising rents, slowing wage growth, tight-lending environment, can’t find home in desired price range, increased college enrollment, and delayed marriage/children etc.