Right about now, more and more millennials are currently looking to buy homes than ever before. In fact, during the third quarter of 2018, the rate of homeownership across the nation rose by nearly 65%. Many newer or first-time homebuyers are largely responsible for this increase. So millennials are coming out of the woodwork to finally purchase homes for themselves and their families.
Many of today’s millennials earn an excellent income in tech and other thriving industries. Or they create their own startups and businesses that achieve massive success. So this younger generation has plenty of capital available to purchase properties. They are moving into well-respected Dallas neighborhoods, high-rise apartments in New York City, and expensive brand-new homes in the San Francisco Bay Area.
But this generation of homebuyers comes with their own set of quirks and expectations. In fact, we’re noticing specific trends in the millennial home buying process that we would like to tell you about today. To learn more, please keep reading to discover the truth.
Trend #1: Interest Rates Are on the Rise and Millennials Are Changing Their Home Buying Strategy
Now that mortgage interest rates appear to be on the upswing, many millennial buyers now have to reevaluate just how much purchasing power they currently possess. As interest rates get higher, their purchasing power shrinks. With rates moving upward by something as simple as a quarter of a point, it can definitely have a major impact on how affordable a house actually is.
So, expect millennial homebuyers to spend time fully analyzing every real estate deal that they come across in this ever-changing market. They are smart and savvy buyers to say the least. They understand how money and interest rates work and they aren’t willing to put themselves in a tough situation that they cannot crawl out from under.
As a real estate agent or investor, you’ll need to help millennial homebuyers determine if they can afford a particular new home or not. Help them analyze these deals and help them understand exactly how they’ll spend their money. This will make the home buying process much easier for millennial buyers and the investors, real estate agents and loan officers helping them acquire their dream home.
Trend #2: Baby Boomers and Millennials Are Competing Head-To-Head for Many Properties
Millennials now have more purchasing power than ever before. In fact, it’s estimated that millennials purchased 30% of homes valued $300,000 or more in 2017 and 2018. This is a 14% increase in the last five years.
Guess what? Because these millennials now have more money to purchase property, they are now competing with baby boomers for many of today’s top trendy apartments, single-family homes, and multifamily dwellings. And this trend will continue as we move into 2020 and beyond.
Baby boomers and millennials are both looking for similar things. They want beautiful homes with the best amenities. They want to live in good neighborhoods where grocery stores, schools, pharmacies and more are all close to home. They want smaller homes that they can easily upgrade. So the boomers and the millennials will continue to fight it out for the same properties even though they are from completely different generations.
Trend #3: Millennials Aren’t Afraid of a Little Hard Work and Elbow Grease
Contrary to popular belief, millennials are willing to work hard to own their dream home. In fact, when it comes to renovations and repairs, these savvy individuals are willing to get their hands dirty in order to get the job done. They aren’t going to be quick to hire the local handyman or contractor to fix up their place.
On the other hand, because of their DIY spirit and ingenuity they know how much labor and materials cost. They understand the amounts contractors are charging and for what purposes. And they use this information to look for red flags when seeking out top-quality real estate deals.
Having savvy homebuyers to work with is definitely a good thing. These confident young adults aren’t afraid to do some honest to goodness labor in order to own their ideal home.
They can look at an older, more rundown home and see the beauty hidden underneath before they complete their DIY renovations. Many baby boomers do not possess the same level of foresight that the younger generation currently maintains. So investors and real estate agents will have an easier time selling worn-out properties to the millennial generation willing to do the work to fix them up and make them look beautiful once again.
As you can see, millennial homebuyers are a little different than generation X and baby boomers. They fully understand the value of a dollar and they are willing to buy materials and perform their own labor to fix up their new home. So keep this information in mind the next time you attempt to sell a home to a millennial buyer because knowing these trends will come in very handy.