How Millennial Home Buyers are Changing the Real Estate Market!
What is important to millennial home buyers and how should home sellers prepare their home to sell to this upcoming group of home buyers!
Realtors® need to understand the home buying trends of millennials and guide them through the home buying process.
Home sellers need to learn how to market their home to millennials.
Millennials and Technology
Millennial are quickly becoming the largest group of home buyers. In 2017, 66% of the buyers were 36 years old or younger. (*NAR) They are very familiar with social medial and digital technologies and they begin their home search on the internet. If you are a Realtor® you better brush up on your technology skills if you want to work successfully with millennial home buyers!
Communication is Key!
Millennials leverage technology in all that they purchase and expect their real estate agent to be tech savvy and speedy in communicating with them. If you are on a chair lift skiing and that phone rings you have 10 seconds to respond before they call another agent to help them. I suggest you carefully remove your gloves and answer it!
Texting is one of the best ways to reach them. Have you ever called to leave a message and then are shocked that they keep their voice mails full, forcing you to send a text message? This is often by design not accident.
This generation was raised on technology and real estate agents better be able to keep up on social media. Millennials expect a quick response to inquiries.
Buying Power of Millennials
Millennials begin their home buying process when they feel they have an increase in financial stability. They are building their careers and have a median income of $100,700. Many have school loan debt of 25k and up (*NAR) and some can’t get financing to buy a home due to these loans.
They typically finance their home purchase but may rely on a family member for financial aid or a down payment. If this is the case, then Realtors® need to be ready to guide “two sets of clients” and know how to work with each age group.
Parents will be looking for different things in a home than their young adults would. They see Realtors® as their trusted advisors to the biggest financial decision of the their life. If you are hired as their real estate agent, make sure you help them with their objections and guide them with their best interests in mind.
Can Millennials Afford Financing?
Most Millennials will finance their home. The median home price range is 205-227k. They are looking to avoid wasting money on rent and invest in the real estate market. Having a good mortgage broker is important to help them through the lending process.
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Credit and scores are key as they determine what financing options are available to a home buyer. Most importantly make your monthly payments on time, every time!
Getting PRE-APPROVED for a mortgage (determining what you can comfortably afford) is the first step.
There are many different 1st Time Home Buyer Programs (not owning a home in the last 3 years) with as little as 3% down. There are also a Down Payment and & Closing Cost Assistance Program (DAP) that is as close to 100% financing as possible.
A straight conventional mortgage requiring 5% down might be a better option especially if you, the buyer, has weaker credit and not much saved. An FHA program might even be best.
Where Do Millennials Want to Live?
Many young college graduates moved to cities, however the trend now is to move to the suburbs. The most important thing to millennials is having a close proximity to work. Some prefer to rent where they work and buy where they play. How nice it is to rent in San Francisco and own in Tahoe! They have busy social schedules and would rather spend their time hiking, skiing and traveling so, rely on a realtor for advice in purchasing.
What are Millennials looking for in a home?
Are Millennials willing to put in New Kitchens and Baths?
One thing I know for sure is they want help from professional Realtors® the process of purchasing real estate!
They are NOT interested in fixer-uppers. They love homes that are staged and look like the furnishing came straight out of pottery barn. I had clients that passed up a home with good value and financial investment because the house needed some paint. They bought a small house instead because it was completely renovated. They loved the new appliances and the clean fresh look. They don’t want to spend their precious free time doing DIY home improvement projects including landscaping and gardening. They also don’t have the cash do put in new kitchens and baths.
This age group is looking for an open floor plan, new large kitchen, new appliances and move right in condition! The average time they stay in their first home is 6 years, so they won’t be getting their money back anytime soon if they do major renovations.
Statistics from NAR stated that:
• 11% of millennials bought new construction.
• 48% wanted to avoid home renovations.
Features and Benefits of the Home
Millennials are looking for energy features & “SMART HOMES” when purchasing.
Some of the features they are looking for include:
• Solar Panels – Realtors® and home buyers should get educated in the objections people have concerning solar and understand how solar pricing works.
• Technology in the home is a plus IE: security systems, mobile temperature controls, light bulbs you turn on with cell phone etc.
• With the increasing trend of people working from home, a home office is a plus.
• These buyers also want to live close to work and this trumps environmental features of a home.
Home Sellers Take Note!
How to Market and Sell Your Home to Millennials
If you are a homeowner getting you home ready to sell, be aware that millennials are looking for updated kitchen and baths, energy efficient homes (SOLAR), upgraded appliances, and smart home features.
The Realtor® you hired to list and market your home for sale had better be using social media marketing to advertise because that’s where the 36 and younger generation is hanging out.
Millennials spend lots of time on the internet researching everything they purchase. 58% use a mobile device to find homes on the internet. (*NAR)
They will look and find a home to buy online and then call an agent to preview it. Make sure your home is staged to sell! Professional photography is very important. Make sure your listings have floor plans and professional photos. The home should be marketed on all the social media sites especially the ones millennials frequent.
As I mentioned before, when previewing homes, millennials typically bring parents who might be helping with the down payment so agents should be prepared to have “two sets” of clients and be ready to answer questions that will be important to both generations. One might be more interested in home décor and the parents might be looking at the structural features of the home.
Most millennials are busy with work, travel and fun! They may not have an interest in fixer-uppers but some have an interest in foreclosures. As their real estate agent, make sure you are prepared to discuss the pros and cons of buying a foreclosed property. Have your mortgage broker explain loan options such as 203B loans. These properties may be cash only.
Do Millennials Work With Realtors®?
92% of Millennials work with a real estate agent and want to be guided through the the process of purchasing real estate. They want help finding the right home, negotiating sales terms, and negotiating prices. They usually interview only one real estate agent before hiring a Realtor®. They look for honesty and someone to trust. This is huge! Personal relationships are an important bond. They like regular communication and to be updated on the market regularly. Be responsive and informative!
If they like the Realtor®, 74% of them will remain loyal and use you again in the future when buying their next home. They will also refer the realtor to friends and family.
Their home buying process typically takes about 10 weeks before they decide on a home.
Buyers under the age of 36 are currently the largest generational group of home buyer! Realtors®, get on board and learn how to guide them through the process! For more real estate information see the TOP REAL ESTATE ARTICLES FOR BUYERS AND SELLERS.
Mortgage Information provided by Jan Marsh, Home Services Lending, LLC
Precautions When Buying Foreclosure Properties via Wendy Weir
Real Estate and Millennials via Jeff Nelson
Tip For Millennial Home Buyers via Bill Gassett
What Real Estate Marketing Strategies Should My Agent Be Using via Kyle Hiscock
First Time Home Buying Tips for Millennials via Paul Sian
Copyright ©2017 “Home Buyers and Sellers Generational Trends.” NATIONAL ASSOCIATION OF REALTORS®. All rights reserved. Reprinted with permission. 2017
Real Estate information was provided by Eileen Anderson, a recognized leader in her field. Eileen can be reached via email at Eileen@eileenandersonrealtor.com or by phone at 860-966-2112. Eileen has helped people move in and out of many Connecticut towns since 2000.
Thinking of selling your home? I love Real Estate, sharing my knowledge and helping people find the home of their dreams!
I am licensed for residential real estate sales in the state of Connecticut including but not limited to the following CT towns: Avon, Bloomfield, Burlington, Barkhamsted, Canton, Colebrook, East Granby, Hartland, Hartford, Suffield, Windsor, New Hartford, North Granby, Farmington, Litchfield, Simsbury, Suffield and West Hartford, CT.