Millennials have faced a number of obstacles when it comes to homeownership. Older millennials began their careers in the midst of the financial crisis of 2007-08, and the generation as a whole has been plagued by student loan debt and increased cost of living.
Consequently, many millennials have delayed major life milestones such as marriage, having children, and buying real estate. However, the pandemic has pushed many of these young adults to finally take the leap into homeownership.
According to Clever Real Estate’s 2021 Millennial Home Buyer Report, nearly one-third of millennials (30%) say COVID-19 pushed them to begin house hunting earlier than they originally planned. Lockdowns, remote work and record-low interest rates have caused people to reassess their priorities, and homeownership seems to be at the top of the list.
Whether you’re a real estate agent, broker, or someone just thinking about selling your home, this article will cover interesting facts you need to know about millennial homebuyers.
1. They’ll buy sight unseen
Social distancing measures have forced agents, property managers, and landlords to turn to virtual tours to show their properties. Since the start of the pandemic, the prevalence and quality of these digital tools have greatly increased, and millennials seem to be quite comfortable viewing homes online. According to Clever’s report, 80% of respondents said they would consider buying a home sight unseen.
2. Fixer-uppers aren’t a deal-breaker
As home prices rise and saving for a down payment continues to be a challenge, millennials are turning to fixer-uppers. Even though properties in need of repair can quickly turn into money pits, young adults are willing to gamble a bit in order to achieve their dreams of homeownership — 71% of millennials say they'd buy a fixer-upper.
3. They want more space
Now that more young adults are working from home and starting families, they are also looking for bigger houses to accommodate their changing lifestyles. Before the pandemic, the average home size that millennials were after was 1,700 square feet. Today, they are looking for homes around 2,400 square feet — a 41% increase.
4. A good deal is important
Clever’s millennial homebuyer report revealed that 56% of millennials want to spend less than $250,000 on a house. The reality is, though, that the average U.S. home is currently valued at $269,039. Therefore, anything the seller can do to help with closing costs, such as offering concessions or credits, can help finalize the deal.
5. Down payments are their biggest barrier
Clever’s report also revealed that two-thirds of millennial homebuyers say they are unable to afford the average 20% down payment on a house. However, most people don’t actually pay 20% for their down payments anymore. According to the National Association of Realtors, the median down payment in 2019 was just 12%, and for first-time buyers, it was even lower, at only 6%.
6. Student loan debt is another big hurdle
One of the biggest reasons that millennials have trouble saving up for a down payment is the fact that they are repaying their student loans. Nearly 45% of millennials have student loan debt, and this crisis does not seem to be getting better, with total outstanding federal student debt at $1.5 trillion. In fact, the class of 2019 graduated with an average of nearly $30,000 in debt, according to Student Loan Hero.
7. Finances are a huge source of anxiety
Unsurprisingly, millennials' financial situation is a huge source of anxiety, especially when buying a home. In Deloitte’s 2020 Global Millennial Survey, 42% of millennials said they felt stressed or anxious most of the time, with “longer-term financial future” representing the top-reported cause of their anxiety.
Although young adults are struggling to get a hold of their finances in the face of student loan debt and rising home prices, services that allow them to save money such as discount agents and home buyer rebates can help draw them in.
8. Moving to the ‘burbs
Sheltering-in-place has made living in a small, expensive apartment in the city less appealing. Not only that, but urban homes cost more per square foot than suburban and rural homes. Now that millennials are starting families and working from home, they are relocating to the suburbs to gain access to better schools and more spacious houses.
9. Low interest rates are motivators
In light of COVID-19, the Federal Reserve has reduced interest rates to historically low levels, motivating many millennials to finally jump into the real estate market. Today, the average rate for a 30-year fixed mortgage is just 3%, and a 15-year fixed-rate mortgage is just 2.375%.
10. They view homeownership as part of the American Dream
One of the biggest reasons millennials are interested in homeownership is because 80% of them view it as part of the American Dream, according to Clever’s millennial homebuyer report. Property tends to appreciate in value over time and provides the ability to build home equity, accumulate wealth, and save money in the long-run (as opposed to renting). It’s a huge part of being financially independent.
11. Millennials are the largest group of homebuyers
According to the NAR’s 2020 Generational Trends Report, millennials make up the largest share (38%) of homebuyers in the U.S. Therefore, it is important to understand what motivates them when they are looking for a house and how they search for their homes.
12. They’re a tech-savvy generation
Millennials are used to having information at their fingertips, and they also expect that same level of convenience when it comes to house hunting. Digital tools such as virtual showings, professional photography, video tours and a strong online presence can help you attract millennial buyers.
Moreover, installing smart home integrations — such as app-controlled thermostats, doorbells, and security systems—will also make your property stand out to these tech-savvy buyers.
13. They use social media for house hunting
Being the tech-savvy generation they are, millennials also use social media to search for homes. There are an enormous number of Instagram accounts dedicated to interesting and low-cost property listings (such as @cheapoldhouses), and agents have also realized they need to have a strong social presence.
Using professional photography can also help your social feeds attract followers and even sell houses. According to Clever’s millennial homebuyer report, more than 1 in 10 respondents said they would buy a house after only seeing photos of a property.
14. Outdoor space is important
Millennials place a large amount of value on outdoor space, whether it’s to sit around a firepit with friends or to enjoy green space with their young children. Some are even willing to give up some square-footage inside or an extra room for a nice backyard or patio.
15. Millennials love their pets
Another reason millennials value outdoor space is that they want plenty of room for their pets to run around! A whopping 70% of millennials have a pet, and since the pandemic has started, pet adoptions have continued to increase. They view their furry friends as if they are their children and take their pets’ needs into consideration when home shopping.
Consider: The NAR’s generational trends report revealed that “convenience to vet/outdoor space for pet” influenced neighborhood choice for 30% of buyers ages 22-29 and 20% of buyers ages 30-39.
16. They want community
Overall, millennials are searching for a sense of community. They are looking for neighborhoods that cater to their hobbies, interests and needs. They want to be near good schools for their children, fun activities for their pets, and entertaining spaces where they can hang out with friends and family.