Millennials, now in their late 20s to early 40s, have gotten a bad rap for their views on the housing market. Before the pandemic, this generation was lambasted for living with their parents or perpetually renting but today, data shows that Millennials may have just been waiting longer to enter the market in comparison to their parents.
It should be noted that getting a mortgage is nothing like it was for previous generations. No longer do people have to drive to a bank to fill out an application, submit paper documents, and hope the loan officer takes their side. Today, the application process can be completed completely online with instant results from the comfort of your home without ever having to step foot in a bank. Not to mention that most people begin their search for a home online without the help of a real estate agent, something that was formerly seen as a requirement.
But when it comes to their preferences, millennials largely hold the same values as their parents: finding a home in a safe neighborhood near a good school with room to grow a family. However, they are also more likely to choose a smaller home or taking a chance on a fixer-upper.
The economic downturn that occurred at the beginning of the pandemic affected younger Americans the most. According to Pew Research, 52% of adults aged 18-34 are now living with their parents due to economic factors stemming from the pandemic. Mounting student loan debt, sluggish wage increases, and the ever-rising cost of rent also factored into these people’s decisions to remain at home.
According to Better Homes and Gardens Real Estate The Masiello Group, the pandemic also “drastically shifted” peoples relationship with their jobs.
“Work from home policies eliminated the need to lime in city Centers,” BHGRE The Masiello Group said. “What followed was higher demand for homes in suburban areas and smaller cities. [We] saw this play out in Northern New England with an increase in home buyers from urban areas along the Interstate 95 corridor relocating to small towns and cities in Maine and New Hampshire.”
The demographics of a typical buyer also changed after the pandemic. Data from Zillow now shows that half of all buyers in 2021 were under the age of 41 and the median age of a homebuyer was 36. In other research, CoreLogic also found millennials made up 67% of first-time home purchase applications last year.
But despite the hand of cards that millennials have been dealt, they remain optimistic and are still finding ways to save for a home and get into the real estate game.
So what are millennials looking for? Affordability, for one.
“Surveys of millennial home buyers show that affordability is the Number one factor in buying a home and that they Are willing to move to more affordable Cities to get what they want,” BHGRE The Masiello Group said. “Counter to stenotypes about Millennials and their desire for big cities and apartment living, one survey showed that having a large yard and quiet neighborhood were the top attributes millennials are searching for.”
"Millennials, it turns out, aren't that different from the Americans that came before them," said Chris Masiello, President and CEO of BHGRE The Masiello Group. "They want that piece of the American dream, and are seizing it, all while facing some challenges that are unique to their generation."
While affordability is key, millennials tend to want smaller (which usually means cheaper) due to their proclivity to have smaller families. They also tend to be more environmentally conscious who may be trying to reduce their carbon footprint and do not want to expend the resources needed to heat and cool a home larger than they need.
So, what’s standing in millennials way from getting a home? Well, for one, Boomers, who are looking to downsize, are shopping for the same homes as millennials, exacerbating record low inventory problems.
"The lack of inventory, the high demand for those smaller starter homes, and the competition with older generations who have a lifetime of savings and accrued equity makes it very tough for Millennials to get a foothold in the real estate market," said Masiello. "They really need to do their legwork at the beginning of the home buying process to compete."