It was once thought that millennials, a generation born roughly from 1981-1997, were the entitled generation that was to live at home with their parents, long after graduating from college and securing full-time jobs. As recently as 2015, millennials were making 20% less than the generation preceding them, primarily due to economic setbacks stemming from the great recession, which led to difficult factors ranging from a slow job market to the inability to afford to live independently.
By 2020 millennials are expected to make up half of the U.S. workforce, which is indeed something to take note of. This generation that has embraced, out of a unique combination of idealism and necessity, coworking spaces and month to month leases, is beginning to emerge as deeply resourceful, creative, and determined. With many millennials now either in or nearing their 30s, how will this generation approach the housing market?
Don’t be confused, millennials want to purchase homes.
According to a 2018 Bank of America Homebuyer Insights Report, millennials want to purchase homes and they are prioritizing home ownership above other life events like getting married or having children. The report also states that 74% of millennials plan on buying a home in the next 2-5 years and a significant 94% list their first two requirements for purchasing a home as having enough money and obtaining a more lucrative salary. The other two motivating factors, like marriage and family, lag significantly behind.
Kathryn Menshaw, CEO and Co-Founder of The Muse, smartly points out some characteristics unique to millennials,
Every generation brings something new… and millennials are no exception. As a group, they tend to be highly educated, love to learn, and grew up with the Internet and digital tools in a way that can be highly useful when leveraged properly.
That leaves us with the question, how does growing up alongside technological innovations and the internet affect millennial purchasing power?
From realtors to mortgages, millennials purchase homes differently
Millennials expect an app for seemingly every process. Issuing invoices, taxes, traveling and even ordering groceries have become more simplistic with the emergence of mobile-friendly platforms. Millennial shop and compare nearly everything they purchase online, and mortgages are no different.
Morty, for instance, instantly matches buyers with competitive rates and products, and then closes the loan for you, allowing homebuyers to experience the mortgage process in a streamlined and pain-free manner. Tech has infiltrated nearly all aspects of the homebuying process, and thanks primarily to the demands and needs of millennials, paperwork, unclear procedures, and confusion can be easily avoided.
Millennials have grown up in an era in which social media provides instant communication, interaction and often gratification. Recommendations have taken center stage with Yelp, Google reviews, Facebook reviews, and other platforms, so making purchasing decisions have become dramatically influenced by the experiences of others. Millennials are more likely to seek out a realtor based on a recommendation or referral than they are to shop around for the best fit. The methods millennials bring to the homeownership process are going to impact the real estate industry significantly as it transforms into a new more technologically conscious age.
Entitled and lazy, or financially literate and pragmatic?
With the arrival of millennials came a significant shift in priorities, ranging from marriage to the workplace. Many millennials prefer to choose a place of work with demonstrated corporate social responsibility methods in place and have put their career and establishing themselves financially before marriage and children. Excessive student loan debt and slow wage growth may have inhibited this generation’s purchasing power for a short while, but it seems hard work, dedication, and a new perspective is what it takes to overcome.
Millennials place homeownership above other significant life priorities, and in fact, it’s second only to being able to retire. Millennials may have gotten a bad rap for living at home with their parents, but many were merely trying to cope with an unfortunate economic situation and took smaller or non-traditional jobs to make ends meet. These efforts cannot be defined as lazy, instead, demonstrate an interest in and development of financial literacy. With such a monetary minded generation, we can expect them to approach the housing market with unique needs never before seen.
Onwards and upwards
37% of millennials plan to buy a house independently of a partner or family, and no area of the United States is immune to this influx and interest of millennials in the housing market. A 2017 U.S. Census Bureau Current Population Survey reported that despite coming of age in a slow job market or experiencing the highest student loan debt in history, homeownership among millennials is rising in all U.S. cities, regardless of size. From their resilience to not only survive but also grow in a difficult economic time, the future of homeownership for millennials is looking bright.