When it comes to reaching buyers, there is one group that continues to be more elusive than the rest: millennials. However, The Wall Street Journal reports that prospective homebuyers in their 20s and 30s that were previously hesitant to buy a home are actually now driving the recovery of the housing market amid the pandemic. But why? Well, the National Association of Realtors® says that low-interest rates may be enticing more millennials to become homeowners. So, how are millennials changing real estate during the pandemic?
Millennials as Homebuyers
According to Pew Research Center, millennials are now the largest living adult generation in the U.S. with the largest segment having been born in 1990 and turning 30 this year. This is making them the fastest-growing segment of homebuyers. Along with millennials currently being the largest generation of potential homebuyers, the most recent U.S. Census Bureau Housing Vacancies and Homeownership report also showed that the homeownership rate for 25 to 34-year-olds has increased from 36.5% in Q4-2018 to 37.6% in Q4-2019. This shows that prior to the onset of COVID, the number of millennials buying homes was already increasing.
This group also has a fairly high purchasing power with a median adjusted household income of more than $69,000. So, with an increasing trend of homeownership, more income to spend, and low interest rates, this perfect storm has made right now the perfect time for millennials to look into becoming a homeowner.
How Millennials Have Changed the Housing Market
Find a home that checks all the boxes. Although now is a good time for millennials to purchase a home, that does not mean that they will want to settle. According to a survey from the National Association of Home Builders, 41% of millennial homebuyers prefer a brand-new home and they are not as interested in buying a home that requires remodeling.
Focus energy on homes that save energy. Surveys have shown that millennials tend to make decisions with environmental impact in mind and home buying is no exception. Environmentally conscious improvements to homes such as the addition of solar panels and energy-efficient appliances are becoming more common. In fact, most new features in homes will use the minimum amount of energy required for a given task, thus reducing home energy usage by as much as 50%.
Technology will play a role in the home buying decision. Having experienced a ton of technological change throughout their lifetime, it only makes sense that millennials prefer a home that is well equipped with technological luxuries. Many older homes are now being rebuilt with technology in mind just for millennial buyers. With the latest appliance models, security systems, and safety features like water detection and electrical monitoring, homeowners can feel even more protected with lower insurance premiums as an added bonus.
On a similar note, millennials also expect a digital home-buying experience from search to signing. According to a Real Estate in a Digital Age report, “99% of millennials start their home search online and 58% found their current home on a mobile device.” Realtors® and lenders alike have made digital adaptations to the traditional home buying experience; which only serves to aid millennials in their quest to purchase a home.
What does the future look like?
Due to the additional changes in the housing market that have occurred as a result of the pandemic, it is predicted that millennials are estimated to purchase at least 15 million homes over the next ten years. With numbers like these, millennials should feel confident in their decision to purchase a home as today’s times have created a perfect storm that has given way to a surplus of homes, lower interest rates and an optimal buyer’s market.
Are you interested in becoming a first-time homebuyer? Contact Catharine Pappas to get started on your dream of homeownership today.