Millennial Homebuyers

By: The Farmers Bank

I say let’s just blame it all on those millennials!!! Oops, did I say that out loud? Well, maybe since I was thinking it, it’s not any more sinful to say it in print. On the other hand, should this young generation take the blame for everything? They are different from the preceding generations. I am not talking two heads or anything like that but there does seem to be a new article posted almost every day decrying their responsibility in killing a long-standing industry. So much so, that Business Insider has a list of industrial homicides the generation has committed, including Applebee’s, real estate, “big napkin” and beer. This leaves one to wonder, “Will they kill again?”

Maybe they will, maybe not. They are a long cry from the Baby Boomer generation I proudly profess to belong to but in many ways, nothing is new. Although they are the generation of smartphones, uber, artisan pizza and craft beer, Millennials, much like each generation before them, prefer to live in houses.

Did you know that Millennials comprise the largest group of homebuyers? While many mouthpieces have made assumptions about millennials’ lack of participation in the economy, this generation has quietly overtaken Gen X’ers as the largest group of homebuyers. The National Association of Realtors have reported that people 36 years and younger have made up the largest share of homebuyers for the past four years. Forty-five percent of homebuyers in January of 2017 were millennials.

It’s worth noting that Millennials outnumber Gen X’ers by 11 million according to the US Government and size of the generation matters.

Most millennials haven’t even reached the median age for first-time homebuyers. For four decades, the median first-time homebuyer has been around 31 years old. Older generations can complain about millennials’ inability to grow up and move out, but the fact that two thirds of millennials haven’t even reached the age when most Generation X bought their first home. According to the National Association of Realtors Home Buyer and Seller Generational Trends Report of 2017, Millennials will form 20 million new households in the next seven years.

Millennials are renting longer (six years on average) but not much longer. But whether they rent or own, owning a home means more control and more security, according to Fannie Mae. Half of new homeowners stated having a place to call their own as their primary reason for purchase.

Believe it or not, a leading reason for millennials to buy a home is to provide a spacious backyard for their dog. A recent survey from Harris Poll and SunTrust Mortgage found 33 percent of millennials who bought homes did so because of their dogs.

Most millennials are not interested in diving into the home buying process alone. The overwhelming majority (92%) asked the help of a realtor. Most of these realtors were found through a referral from a friend or family member. No other generational group relied as heavy on word of mouth. Virtually every millennial who buys a home shopped online first and 58% used a mobile app or device to find their realtor.

Back in the Baby Boomer days, most homebuyers were married couples seeking a home in the suburbs. More than 25% purchased a home because of a life change like getting married or the birth of a child.  The millennials, although they seem strange to older generations, are not that much different when it comes to home buying.

So, to sum it up, millennials, as a rule, go online first. Whether they are shopping for clothes or for a house they look on line before pursuing a purchase in person. Second, since millennials are just now aging into prime home buying years, this is going to be a first time (handholding) experience for most of them. And this generation expects quality personal service resulting in an authentic, hands-on experience.

It’s really easy to make assumptions about millennials, but millennials are only going to command more of the marketplace’s buying power in the coming decades. It may be time for us to stop treating millennials like a fun new demographic and start seeking to understand the generation.

Congratulations from this Baby Boomer to my Millennial boss who just purchased her first home using that online app and realtor referral from a friend. However, she does not own a dog. Well, not yet but I suspect one is coming to a backyard near her soon!!

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