Millennials have reached adulthood and are entering the real estate market as first-time home buyers, shifting their focus away from renting.
They’re a group unlike any previous generation. These children of the digital age have grown up exposed to gaming, the internet, Google, instant messaging, mobile phones, and social media.
With an influx of potential millennial buyers, real estate companies have to discover ways to attract their attention. The tech-savvy generation may be looking for a home to buy but they’re not doing it the same way as their parents. Millennials are used to asking questions and getting immediate answers.
Everything millennials want to know can be answered by a search engine. So, real estate companies have to be present where millennials go for facts. That means agents may interact and meet their clients digitally before they see them in person.Everything millennials want to know can be answered by a search engine. So, real estate companies have to be present where millennials go for facts. That means agents may interact and meet their clients digitally before they see them in person.Click To Tweet
Millennials Are a Crucial Demographic for Real Estate Companies
While the 74 million baby boomers ages 52 to 70 have remained the largest generation throughout United States history, the number of millennials is projected to surpass them in the near future.
The increasing mortality rate of the aging boomers is reducing the size of their cohort. Meanwhile the millennial group continues to expand with the addition of young adult immigrants.
Millennials were born between 1981 and 1996 and they range in age from 20 to 35. They’re the first generation of the new millennium and sometimes are referred to as Generation Y.
An analysis of U.S. Census Bureau data conducted by the Pew Research Center has concluded that millennials are the majority generation in the labor force. Thus, more than one in three employees are millennials which is 35 percent of the workforce. The money they earn may be used to buy a home.
Understanding the Millennial Experience and Home Buying
When the Great Recession occurred, most millennials were teenagers, but that doesn’t mean they weren’t impacted by the crisis.
They may have lived through financial hardships due to their parents’ unemployment, loss of income, foreclosure on their house or the fall of the stock market. Because of their experience with the downturn in the economy, millennials tend to carefully spend their discretionary funds and save money.
Yes, millennials have delayed buying a home by living with their parents or renting with friends but they’re starting to dive into the housing market.
The results from NerdWallet’s Home Buyer Report shows that 82 percent of millennials prioritize buying a home more so than other generations and they believe it’s a good investment.
According to Ellie Mae’s latest Millennial Tracker survey, they’re now accounting for 91 percent of the mortgage loans for new home purchases.
In 2017, millennials made up the largest segment of home buyers (34 percent), and of those Generation Y purchasers 66 percent bought their first house.
That means that a portion of millennials were buying their second or third home. Most homeowners sell their house after 10 years, but millennials on average sell their first home within six years.
The Millennial Lifestyle
Millennials are not in a rush to get married or have children.
The median age for millennials to marry is 27 for women and 29 for men. And, they are waiting until their 30s to have children if they have them at all.
Millennial college graduates with a bachelor’s degree have student loan debt that averages $30,000. Experian reports that the average credit score for millennials ages 22 to 28 is 652 and for ages 29 to 35 it is 665. A low credit score makes it hard for millennials to afford a down payment on a house, so many of them apply for mortgage loans insured by the Federal Housing Administration (FHA) or receive financial help from their parents.
Millennials employ social networking to spread the word about their interests and business affiliations. They stay connected to family, friends and coworkers through texting, messaging and social media such as Facebook, Twitter and Instagram.
Millennials also love to watch videos on their mobile devices and use apps for their banking and purchasing.
Favorite Millennial Locations and House Preferences
Millennials live in urban, suburban and exurban areas.
Contrary to the past, only 15 percent of millennials are presently living in big cities. Some millennials are moving into formerly blighted towns and cities because of affordable housing and the option to work remotely.
Instead of choosing to live in cities, millennials are settling on a mixture of urban and suburban locations. The communities have retail shops, restaurants and open green spaces that are accessible to pedestrians. These locales are ideal for them because millennials prefer to live near public transportation so they don’t have to drive to work.
As far as home design, millennials want realtors to show them houses that need little or no remodeling and upgrading.
They want a single-family detached home with an updated kitchen and bathroom.
In addition, they desire homes with:
- Open floor plans
- A laundry room
- Exterior lighting
- Home office
- Green features like solar panels
Realtors should keep these things in mind when working with millennial clients.
Marketing Strategies for Networking With Millennials
When millennials look for a home, they use the internet.
To market your real estate company to millennials, you have to network with them through their social channels. You can accomplish this by posting short videos, shareable blogs and online chats.
Agentology, a lead qualification and generation platform for real estate agents, is utilizing Facebook Live and Instagram to connect with millennials. The company uses Facebook Live for product updates and industry news. The photo and video sharing capabilities of Instagram allows the company to promote articles, sponsor ads and highlight the company’s services.
Coldwell Banker polled 3,000 adults and found that 77 percent are open to taking virtual reality (VR) house tours and 84 percent want to view video footage.
RE/MAX is hosting real time open houses on Facebook Live.
Sotheby’s International Realty already offers 3D and VR tours of its properties for sale.
The Millennial Approach to Buying a Home
Baby boomers purchased a home after walking through it, stepping into rooms, peeking behind closed doors and wading through a long mortgage approval process. Millennials are more likely to check out live streams of open houses, join a virtual reality tour and complete a speedy online mortgage application.
In fact, millennials can apply for a mortgage in minutes with Rocket Mortgage’s Quicken Loans or they can use Lenda a mortgage lending fintech.
Rather than wasting time and money on old marketing methods such as newspaper ads, flyers and postcards to target Generation Y, real estate companies should focus on how millennials like to communicate. Remember that millennials think visually and are immersed in social media. They appreciate and respond to content that informs and entertains.
Millennials are a huge chunk of the home buying market so you don’t want to miss out on their business. If you focus the majority of your advertising efforts on how millennials gather information and what criteria fulfills their requirements for a home, you may build long-lasting relationships that could lead to new referrals. Millennials might be the key to advancing your real estate business.