Millennials are reshaping the way homes are made, renovated, and marketed for sale across the U.S. They’re also shopping for homes and mortgages in new ways while bringing a strong presence to the home buying and selling markets across the nation.
In fact, as major players in the housing market, millennials are setting new trends that could have far-reaching and lasting impacts on how millions of homes are bought and sold for years to come.
The following takes a closer look at some of the biggest trends in millennial homebuying today.1
For this discussion, millennials refer to those born from 1980 to 1998. “Younger millennials” (YM) includes 22 to 30 year olds, born from 1990 to 1998. “Older millennials” (OM) refers to those who are 31 to 40, born from 1980 to 1988.
1. Millennials make up the biggest group of homebuyers.
About 37% of today’s homebuyers are millennials. That’s the largest share of homebuyers, followed by Gen Xers, who comprise about 24% of the homebuying market. Notably, 2021 marks the 8th year in a row that millennials have made up the biggest portion of homebuyers in the real estate market.
Fascinatingly, most millennials who are purchasing homes these days are first-time buyers. That includes about 82% of young millennial homebuyers and approximately 48% of older millennial homebuyers.
Also interesting are these recent trends in the demographics of millennials who are buying homes in 2021:
- The average age of the younger millennial homebuyer is 27. It’s 35 for older millennials.
- About 2 in 3 older millennial homebuyers are purchasing houses as spouses.
- With younger millennials, far more unmarried couples are buying homes.
- More than 1 in 4 younger millennials are not renting before buying. About 28% are buying homes while living in a family member’s home.
2. Millennials prefer to buy homes over condos.
Single-family homes are the preferred option for more than 4 out of every 5 millennial homebuyers in 2021. One reason is that many in this generation see single-family homes as better investments (than condos).
Still, not just any single-family home will do for today’s millennial homebuyers. They have specific preferences, and they tend to want:
- Ready-to-move-in homes: More than 50% of millennial homebuyers aren’t in the market for major fixer-upper projects. They want a house that’s ready to live in, and about 70% will even compromise space and choose a smaller house if it means that home is move-in-ready (versus needing major renovations).
- New homes over preowned homes: What’s more move-in-ready than a new home? This makes sense, given the above point about millennials, but it goes a bit further. More than 50% of millennial homebuyers say that outdated homes and tacky or poorly done renovations would be deal breakers for them. Only about 1 in 3 millennials say they’re interested in owning previously owned homes because they see them as better investments (than new homes).
3. Millennials care about location & energy efficiency.
Commuting times and costs are a major consideration for millennial homebuyers. For this reason, millennials are more likely than other generations to be buying homes in urban neighborhoods.
Beyond location and proximity to jobs, millennials are also highly focused on the:
- Overall quality of the neighborhood
- Affordability of the house
- Proximity to loved ones
- Convenience of local shopping
- Neighborhood design
- School district quality
In terms of home features, millennial buyers want energy-efficient options, especially when it comes to major appliances and lighting. In fact, while 1 in 3 millennial homebuyers want energy-efficient appliances in the home they’re shopping for, more than 2 in 3 say they “must” have energy-efficient lighting.
4. Most millennial homebuyers are shopping online.
Before millennial homebuyers contact a real estate agent, they usually spend about three weeks doing some online research. That includes looking at listings, shopping for mortgages, and doing neighborhood research.
While that may not be too surprising on the surface, these findings may be:
- More than 1 in 4 millennial homebuyers prequalified for a home loan online before they started shopping for a house.
- More than 60% of millennials who bought a home in March 2020 found their house online. By comparison, only 25% used a real estate agent to help them find the home they ended up buying.
5. Millennials’ strong presence in the housing market is here to stay.
Millennials will continue to dominate the homebuying market through 2021, many predict. In fact, based on the latest projections, real estate experts believe millennials will buy about 15 million homes over the next decade.
Given the trends above, that could transform the way sellers renovate, market, list, and show their homes to attract the millennial homebuyers—in 2021 and well beyond.
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