The housing market may be cool for now, but there is a huge wave of potential buyers on the horizon that are about to heat things up: aging millennials. In the next 10 years, 44.9 million millennials will turn 34, the median age for first-time homebuyers, Zillow research notes. And as they age, millennial buyers will have very different expectations than their predecessors. Since they are reshaping the real estate market, it pays to know what they want.
Such as? Forget about starter homes, overwrought architectural elements, lots of nooks and crannies, huge garages and more. While the stats indicate that many millennials will buy homes, they will do it the same way they do everything else: on their own terms.
Given that their Boomer parents did things the same way, it is not surprising. And now that the majority of millennials are in their late 20s and early 30s, have been married for a few years (their average marrying age is 29) and are starting families, they will transform the single-family home market.
Many Millennials are Skipping Starter Homes
Much has been made of the fact that many of these millennials never got around to purchasing starter homes as they delayed marriage. And they are not going to buy starter homes now either. Many have greater savings, more established jobs and inheritances or family help in many instances, which has fueled their migration to larger, million-dollar-plus properties, says Zillow.
We know this to be true from the commercial interior design work and model home merchandising we do at MCA for major homebuilders. And the numbers substantiate this surprising development. Toll Brothers, the nation’s largest luxury homebuilder (full disclosure and our client), reported almost a quarter of its buyers were under 35 in 2017 and its average contract price was $837,300. Last year, Toll’s revenues rose to $7.14B, a 23% increase from 2017, and its average home price jumped 6% over 2017, ranging up to $1,899,400.
This makes what millennial buyers want critically important, especially since their successors the Gen Z generation is just entering their early twenties. They won’t be old enough to be a serious force in the homebuying market for quite some time.
Since we do extensive demographic and psychographic research on the target markets we design for, we also know that millennials do far more extensive research of their own than previous generations about every aspect of the homebuying process. So when they are ready to buy, they know exactly what they want and have high standards.
Tops on their list? Much has been made of their desire for sleek, clean-lined spaces with open floor plans. While this is true, it simplifies the complexity and depth of millennial’s wants and needs. These smart, savvy young adults want equally smart homes and we’re not just referring to tech when we say smart. Instead, the term means homes that are edited, authentic, well-appointed and luxurious where it counts.
Luxury, Millennial-Style, is Reshaping the Real Estate Market
To Millennials, well-appointed does not mean done-to-the-nines or ostentatious. Yes, top-of-the-line appliances, finishes, fixtures, lighting and the latest smart tech in everything from those appliances to the audio/visual and security systems is critical to spur a home’s sale. But this generation is far from materialistic and acquisitive.
Instead, Millennials are committed to doing more and having less. Unlike their Boomer parents, they have no need to own everything or acquire and collect. As they have become adults, they have been part of the growing sharing economy in many instances founding businesses that contributed to this movement. So they are used to renting everything from dress clothing and gear (be it sporting equipment or furniture) to homes, cars and rides. Forbes calls this the “rentership” society. Where consumption is concerned, they indulge in experiences that make memories, on-demand services for music and other experiential or interactive services rather than ownership.
Because of Millennial’s preferences and proclivities, they prefer spaces that are smaller yet well-appointed and innovative options from maintenance so they can focus on things more important than yard work to shared amenities and programming that brings together neighbors and builds community.
5 Strategies Builders + Developers Should Embrace
Bottom line, Millennial buyers are incredibly specific about what they want, are not willing to settle for less and will pay top dollar to get it all. See five design strategies we have found to be effective conversion features for Millennial homebuyers in recent our column in Builder and Developer magazine.