Recently Sold
The millennials are growing up. Generation Y’s will start to hit 30 this year and that’s big news for the real estate industry. For the second straight year, this quirky, trendy, techno-savvy, hard-to-pin-down demographic will represent the largest group of home buyers in the United States, representing 32% of all home purchases. 8 years ago they didn’t even warrant a generational nickname, 5 years ago they were all but written off by the real estate industry as renters for life, or worse yet, voted most likely to live in their parents basement…… forever, endlessly searching the internet for the perfect job. Today they represent the lifeblood of the real estate industry, and more importantly the economy that sits squarely upon the mountain of debt that comes from those bankrolled purchases. Huh.
So, if they are so crucial to the economy, certainly there are lessons to be learned. And there are.
Buying a home is not romantic. The Millennials came into adulthood with the largest college debt load and the worst job market in history. They watched in horror as their parents lost the “American Dream” homes which they had spent their childhoods in, and vowed never to make the same mistakes. As this group has come of age their focus on home ownership has become as sharp as ever with special attention paid to economy and value, not bigger and better as their parents generation espoused. Instead of risky, zero-down, interest up loans, they are focused on saving to make significant down payments and smart business decisions. 38% of millennial buyers say they will delay their wedding in order to make a proper investment, rather than stretch their budget by putting less down. While many Gen-X’ers bought their dream home first and planned to stay there forever, the Millennials are intent upon the first home being just that – a 5 year investment that gets them started on their path in life. And because the Millennial, on average, are having children 10 years later than their parents generation, the size and condition of the home is less important than the location or the potential to flip it in a few years. It is strictly an investment that they will move on from when their smart phone buzzes, and tells them it is time.
Debt is not their thing. While it only took 7 years for American debt to reach back to its pre-crash levels, the Millennials are not part of that game. 36% of Millennials have never owned a credit card as compared to their parents generation for whom short term debt is a virtual necessity – nearly 87% of them own credit cards with THEIR parents, the boomers, right behind at 85%. By contrast the Millennial chooses to spend more wisely, using cash on hand and debit cards to make purchases within their means. The are the first generation that fell under new regulations that protected those under 21 from predatory lenders targeting college student with expensive credit cards, and the only generation that has chosen to put plans on hold to test the job market before taking on the risk of something they may not be able to pay back. The result is a generation with a stunted credit history and a flat curve towards ownership – but a curve that is now bending upward at an increasingly significant rate.
Technology Rules and there is no rush. This is the generation that stopped shopping and started searching. Whether they are searching for a house, a hobby, a job or a partner, they are hitting the wireless world by storm and they are not looking back. By click, or swipe or any other electronic method, 94% of Millennials began their search online which means that technology is now at the forefront of the real estate world. While 88% of buyers still used a real estate agent last year, technology is the number one tool used to find a place to settle down. Furthermore, the Millennial is taking nearly 3 months to find that home, as compared to the rest of the market who purchased in half that time. They are using the technology at their fingertips to research every aspect of the market. They are using free tools, available on their mobile phones, to research neighborhoods, taxes and trends. They are making smart, educated and technologically savvy decisions that never occurred to their parents.
Conservative is cool. Although politically they are a left-leaning generation they are making their home buying choices based on standards that escaped their parents and their grandparents. Economy is king for the under 30 crowd, choosing homes that are walkable or close to cities and public transportation. They are more inclined to buy near their job rather than depend on fueling their ride to work, and this means that little neighborhoods near population centers are targets for the next generation. They are choosing up and coming communities that may seem a little rough today, but are filling up with like minded youngsters willing to put some cash into a project, sell quickly and move on to the next opportunity without fretting much about the decision.
Look out, folks. Generation Y has moved out of the basement, they have a smart-phone in hand and they’re walking right into a real estate market that never expected them to get real. Ready or not, they are the next new thing!