If you’ve not already done so, it’s more than time to dial into how Millennials think about home buying trends for 2019.
No longer the “coming” demographic, Millennials are now the dominant demographic in home buying. Their dominance will only become larger every passing year until Generation Z overtakes them in 10-15 years.
These six home buying trends listed below may not be “new” but how Millennials perceive and act upon these trends may be different than how older generations have responded. Time to shift towards Millennial thinking.
- Rising home prices. Though home prices are and expected to be rising more slowly this year and next, ongoing wage stagnation makes it harder and harder for buyers to keep up with prices, let alone save for a down payment. To compensate for this disparity between rising home prices and flat wages, home sellers might consider, with agent encouragement of course, picking up closing costs. Paying closing costs, a minor deal sweetener compared to an overall reduction in the price, may just foster more potential buyers to consider and bid on your property listing.
- Mortgage interest rates – Though mortgage rates are currently as low as they were a year ago, even slightly higher mortgage rates translate into less purchasing power, particularly for Millennial and/or first-time buyers. Focus on presenting budget minded/constrained buyers smaller homes (when/if available in your market). For prospects less constrained financially, focus on the increasing inventory possibilities within higher-end/lux markets now seeing between 15%-35% price reductions. Also impress upon your clients that no offer is too low. Price negotiations are happening in 30% of all transactions, according to the National Association of REALTORS.
- Higher rents and fewer houses – Fewer available and/or affordable houses to buy translate into higher rents. Will there eventually be more centralized affordable units? Will your prospects be amenable to investing in such rental properties? Just because there are few if any single-family options now, Millennial prospects are investing in duplexes/triplexes/etc. where they could both live and become landlords in order to help pay their mortgage/renovation/repair costs.
- Buying in suburbs – As city center housing becomes more expensive, suburbs are looking better and better to Millennials. And many suburbs are becoming small cities with great restaurants, shops and entertainment venues. Suburbs such as South Orange NJ and Greeley CO, close enough to respective international airports, offer Millennials a cheaper cost of living, good if not great schools systems for their young families and a cozy, small town feel.
- Walking and biking scores matter – Remember that Millennials have a greater environmental awareness than older buyers. (Environmental awareness is even more important with Gen Z buyers.) Remember that Millennials like to walk and bike to wherever they’re going…they also like the idea of their kids doing the same.
- Green construction – Green construction translates into smart homes, tiny homes and energy savings homes.