COVID’s Impact on NextGen Buyers

Key Highlights

• 23 – 37 year olds hit hard by economy both pre- and post-pandemic
• Characteristics of mid-pandemic homebuyers
• Impact of COVID on home buying plans

Economically, things haven’t been so great for Millennials for a while now. Many older Millennials watched and experienced their families losing their homes during the Housing Crisis. If and when they graduated from college, they carried record amounts of student debt and experienced a poor job market when they were ready to embark on their careers after graduating. Then, when things were beginning to improve job-wise, the COVID pandemic upended the job market and they were hit hard financially again.

According to a survey by Edward Jones and Age Wave, approximately 33% of Millennials and Gen X indicated the pandemic has had either an extreme or very negative impact on their financial security, almost twice the extreme/negative impact experienced by Boomers. Yet, in the midst of challenging financial impacts coming from the pandemic, Ellie Mae reported that Millennials represented 61% of all home loan purchases in July 2020.

National MI and Cultural Outreach wanted to learn how home buying Millennials and Gen Zers are thinking about the buying process and their plans for homeownership. Here are some insights:

Characteristics of Mid-Pandemic Buyers ages 22-37

Of the 1,450 NextGen homebuyers surveyed by National MI and Cultural Outreach, seven in 10 respondents had the flexibility to work from home. Just this one data point tells us that the majority of these respondents held at least a BA degree and earned at least $100,000 annually. The result of their education and income levels and ability to work remotely translated into less stress financially, professionally and in family life. These 7 in 10 respondents indicated they were +182% more likely to perceive the pandemic as a positive impact on their home buying plans.

The one in three respondents who said the pandemic negatively impacted their home buying plans didn’t have the luxury” of working remotely and had to go to work. They were also less likely to have college degrees and earned substantially less than $100,000/year. If the respondent was a woman, the negative impact from the pandemic was much higher due to having multiple responsibilities for work, childcare and assisting with remote learning issues for their children. In fact, nearly twice the number of women had to leave the work force than men due to these multiple responsibilities.

How Pandemic Has Impacted Home Buying Plans

Due to spending so much more time at home during the pandemic whether or not working remotely, survey respondents prioritized more home space, be that space an office or a backyard so the family wouldn’t have to be on top of each other all the time. Also, respondents fast-tracked their plans to move sooner rather than later to get more home space.

Home improvement projects and household items have become more important since past-tense spending activities such as travel, restaurants and entertainment continue to be curtailed or locked down.

According to a recent study by Pew Research, living in city centers has taken a backseat to living in less expensive suburban and/or second-city locations that have access to more outdoor space due to the flexibility of remote working. (Older, wealthier workers and those retired have spread their wings even farther from city centers to booming vacation towns for either full-time or co-primary living arrangements.)

How Housing Professionals Can Be Helpful to NextGen Buyers 

1. Housing professionals must be aware that most everyone, regardless of someone’s financial wherewithal, has been negatively impacted by the pandemic in multiple ways. Uncertainty, upended careers and working patterns, upended learning situations, health concerns, etc. have caused high levels of stress and emotional insecurity. Being an agent who listens, is attentive, is patient and is engaged go a long way.
2. During this time of social distancing, deliver services with technology. Video calls, video messaging and video tours are great ways to build trust and share information while being respectful and safe. Meet your NextGen leads and clients where they are…on Instagram and Facebook, the top-used platforms by NextGen homebuyers. Also, NextGen buyers prefer texting and calling over emailing.
3. One in five NextGen respondents say they either didn’t understand or were not confident about any step of the home buying process. Empower and engender confidence in your clients by sharing content that increases their financial and mortgage literacy. 98% of respondents indicated their real estate agent was their biggest source of trusted information.
4. Share home-related content. NextGen buyers are three-dimensional people. Connect and build relationships with them around what you have in common – home. Provide them with content that relates to home, such as DIY projects, design ideas, recipes, neighborhood resources, etc.

Thanks to Edward James, Age Wave, Cultural Outreach, National MI, Pew Research, Ellie Mae and HousingWire.

Also read: Millennials To Be Outdone By Gen-Zers, Redfin’s Market Update as of Mid-October, What’s Hot and What’s Not in September’s Housing Trends