Millennials, people born between 1982 and 2000, now make up the largest age group in the United States. Of the total US population of 331,449,281 people (Census Bureau, April 2021), around 75.4 million of these fall in this category. Also, this is the largest proportion of 21-39 year olds ever in the history of US population counts.
Millennials are at that stage where they are most physically active and in the middle or starting points of their careers. This is the time when people make most of the choices that determine the rest of their lives. The population of US millennials is big enough that their life choices are having strong ripple effects across the entire economy.
Previously thought to have no interest in homeownership and preferring the freedom of renting to the security of ownership, millennials are disproving this stereotype. Apparently, the initial reluctance of millennials to own homes was due to other factors. Many millennials are burdened with high student loans and this has been a factor in their homeownership patterns.
A second factor is millennials put off marriage and having children longer than previous generations. However, once they pay off their debts, have children or get married, millennials are even keener on homeownership than older generations. As more and more millennials get to this point, their impact on the housing market is going to be even more phenomenal.
Currently, millennials are the largest group of homeowners in the USA at 42%. But, this statistic only covers homeownership by older millennials. As younger millennials become financially stable, this percentage will explode. At the same time, millennials make up 50% of renters: a huge statement on the importance of this age group to the housing market.
When you have a single group within the population taking actions on such a massive scale, it is bound to have serious implications on every aspect of the economy. What effects are millennials having on the housing market? And how can you, as a property investor, respond to these new trends and position for the coming ones?
1. They have larger incomes
The average millennial homebuyer earns more than older generations did when they were their age. This is because of the overall rise in incomes and the fact that millennials are more likely to work in industries with higher wages. Even though many millennials are first-time buyers, they do not fit the picture of frugal first-time buyers.
2. They are likely to prefer deluxe homes
The higher incomes earned by millennials mean many skip starter homes and go for more expensive properties when they eventually buy. Figures from the National Association of Realtors showed that 45% of 30-39-year-olds bought homes worth $300,000 or more. Also, they preferred to have these homes in suburban versus rural areas or big cities.
3. They want strong communities
Being digital natives, millennials seek more human interactions by preferring areas with a strong sense of community. Millennial homebuyers and renters also want neighborhoods that offer experiences in terms of the available amenities. Locations with decent public spaces or unique dining/entertainment opportunities are more attractive to millennials. Because millennials often buy homes for the long-term, local school ratings, and crime rates are very important to them.
4. Millennials value sustainability
Green homes and environmentally-conscious neighborhoods rank top among the things millennials look for. They are less likely to mind the additional cost of having a solar installation in the home. In addition to the fact that it lowers the home’s energy usage, millennials value the independence this offers. Installing green technology and using sustainable building materials in a home will attract millennials.
5. Millennials want adaptive home design
They want their homes to have rooms that can be used in different ways. The home should retain its functionality as the occupants evolve in their lifestyle. The interior and exterior spaces of the home should flow together seamlessly (such as by using glass walls that slide out of the way). And there should be a feeling of roominess; for instance, by having high ceilings in the home.
6. They are tech-oriented
Not surprisingly, millennials are more comfortable using technology to find the homes they want to buy or rent, so it’s important for property investors and managers to come up with a successful marketing strategy to lease properties. What may be surprising is the extent to which they will use technology. In addition to online house hunting, most of their buying decisions are made from information obtained online. This doesn’t mean they make superficial decisions, though, because they are adept at online research and digging up important information.
7. They want smart homes
Being more at home with digital technology, millennials want the convenience of smart homes. Even when they are not ready to have smart home products installed in the home, they want to know that the option exists. Being able to wirelessly connect the appliances and systems in the home offers more ways to manage the home and control energy costs. But the features millennials want to go beyond these: water detection, freeze detection, electrical monitoring, and more, are some of the smart features they want.
We are pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout the Nation. See Equal Housing Opportunity Statement for more information.