Millennials, born 1981 to 1997, think and act differently about homeownership than their older baby boomer counterparts. Why does it matter? The millennial generation, which in 2017 will be roughly 20 to 36 years old, has become America’s largest living generation. In addition, the number of Generation Xers (ages 35-50 in 2015) in this country is expected to surpass the number of baby boomers in 2036, according to Pew Research Center.
Millennials, according to Nav Athwal, founder and CEO of RealthyShares.com, are poised to change the real estate landscape. Athwal wrote about the generational shift in real estate in a Dec. 15 article on Linkedin.com.
What agents need to know
While they’re less likely to be homeowners now, millennials aspire, like generations before them, to own homes. More than 62% of people in the U.S. across all age groups are homeowners. About 34% percent of millennials own homes, according to the U.S. Census Bureau.
A survey by the American Modern Insurance Group of Chicago residents suggests more than three-quarters of millennials think of homeownership as part of the American Dream. And 86% of millennial respondents polled plan on owning a home.
Nearly half (41%) of those surveyed (of all ages) who never owned a home indicated the biggest reason for renting—not owning—was their inability to afford a down payment and monthly expenses, according to American Modern Insurance Group. They had concerns about buying homes in the current environment. Nearly 40% said they were concerned about the long-term value of a home purchased today. Still, others pointed out economic uncertainty and inflated real estate values.
Millennials’ view of the American Dream
While older generations eyed homes laced with white picket fences in the suburbs, millennials are more likely to embrace life in an urban center brownstone, according to a 2014 Nielsen report. Of those surveyed for the report, 62% said they preferred mixed-use communities in the hearts of cities, which are close to shops, restaurants, and offices. And, the more socially conscious and creative the environment, the better for millennials. Austin, Texas, is the millennial’s ideal, according to Nielsen.
But while millennials seem to prefer urban to suburban living, 55% of those Chicago renters surveyed indicated they would consider buying homes outside the city to keep costs down, according to the American Modern Insurance Group survey. This might be the case once millennials, many of whom are delaying marriage and children, start their families, according to Athwal.
To appease millennials, home-buying options in the suburbs should include urban-style perks — from mass transit access to mixed-use properties close to shops, restaurants, and offices, Athwal wrote. Denver and other progressive cities are already transforming to welcome the younger set.
Any other ways you believe millennials are changing the real estate game? Share with us in the comments below!