35% of the U.S. working population are millennials, accounting for the largest part of the workforce.
Does this massive number include yourself in its ranks?
If so, that means you are facing new responsibilities. The top one faced by many millennials is the conversation of settling down, and that means one thing. You are now part of the millennial homebuyer's market.
Millennial trends are changing the housing market with their priorities, and buyer demand only increases. But how is this generation really changing the market?
Keep reading below for our guide on millennial home trends and what that means for the market at large.
The Size of Millennial Homebuyers Market
Millennials are becoming all the rage within the national homebuyers network. That is because the majority of the homebuyers' market is now in the millennial age group.
For context, millennials are anyone born within the years 1981 to 1996. Older millennials in the year 2021 are now anywhere from 33 to 40-years-old. Younger millennials are 25 to 32-years-old.
The generation is growing up and so too are their goals and priorities. No longer is the generation running to big cities for the first full-time jobs out of college. Rather, they migrate to the suburbs to get married and see how children play into their future.
The move to the suburbs and a family lifestyle means millennial homebuyers have taken over the housing market with their needs. When buying a first home, the average age is around 33-years-old, between the older and younger millennial groups.
As they start making long-term decisions, millennials turn their priorities towards homes.
Why the Time is Now for Millennial Home Purchases
The best way to understand millennial trends is through the changing priorities of a generation growing into a more mature phase of life. The average millennial age is now 34-years-old, and the average age of first marriage was around 30-years-old in 2020.
The older millennials (33 to 40-years old) and younger millennials (25 to 32-years-old) are now in the median marriage age group. Marriage and committed relationships mean the generation is thinking of starting families.
The family mindset means that millennial homebuyers are more focused than ever on:
- Entering into the next life milestone on time
- Getting more space for themselves
- Having room to grow a family and take care of added responsibilities
Older and younger millennials have already faced two major financial crises and a global pandemic in their lifetime. This has meant delaying several major life milestones up to this point because of debt and job instability.
Millennials are ready to enter a milestone at a more normal age, and purchasing a house is their chance.
From Big City to Suburbs
One of the major trends impacting millennial homebuyers is the flee from big cities to suburbs.
Millennials have been exiting major metropolitan areas since 2019, even before the pandemic. Instead, they found comfort and community in less urban regions, settling down in a quiet suburb over the city noise.
Big cities such as New York, LA, and Miami were hotspots for millennials, especially upon entering the job market. Odds were better to find a position they loved by relocating to cities with a need for larger workforces. But as millennials get into an age where marriage and family become a priority, the need for being in a large city decreases.
Further, the rise of remote work ensures the generation that they can work from anywhere. This means quiet suburbs become a great place to make a living and grow into the next major phase of life.
Attractive Home Traits for Millennials
Millennials face major ridicule for being the generation who cares more about avocado toast than anything else. Yet millennials prioritize building healthier lifestyles than past generations to make room for what matters, such as work.
52% of millennials go into the workforce to rise through the organization and move up the ladder.
Millennials need home spaces that reflect these key priorities of work, wellness, growth. In short, the generation's homebuyers seek households that are:
- Move-in ready
- Feature newer construction
- Are in walking distance of social spots
- Energy efficient
The move-in-ready home trend has found itself first in the market for decades. Many national homebuyers face enormous stress from the purchasing process alone. They do not want to dedicate more time, energy, and money to updating the outdated.
Move-in ready trends also mean newer construction is top of mind in the current homebuyers network. New construction allows a homebuyer to walk through the door without worrying about leaking pipes, insufficient electrical systems, or old and caving rooflines.
Old construction leads to the need for renovations. But new construction leads to an immediate routine setting in a new space.
Another key element millennials are after is walkability. They want to live within walking distance of social hotspots for friendly hangouts and shopping areas for fulfilling needs. Further, they want to be near school districts for future children.
88% of millennials have made lives in metropolitan areas. The generation is used to bars, grocery stores, and other activities, never being farther than a 10-minute walk from home. That means they are seeking homes that similarly offer walkable access to amenities.
Millennial homebuyers also aim to create more energy-efficient cultures. The generation found itself leading the way for efforts to impact the carbon footprint. Homes that champion clean energy attracts more attention than not.
Current Inventory for Homebuyers
Millennial homebuyers may be ready to buy a place for a budding family. But the market may not be available to meet their demand.
The housing market rapidly transformed in the face of the COVID-19 pandemic, beginning in 2020. The pandemic led to a shortage of lumber as lumber yards were among the first to shut their doors during the lockdown. Without access to lumber, new home constructions were impossible.
An under-building of homes combined with current homeowners too afraid to put their houses on the market means one thing: millennials do not have the amount of inventory needed to cover all demand. Further, the current inventory continues to price itself out of many millennial's budgets.
High demand equals high price, and the U.S. housing market has found that true for the national homebuyers.
2021 found an average of 450,000 homes for sale, not nearly the 1 million on the market in 2019; however, millennial homebuyers continue pushing towards this life milestone. Things like new financing opportunities and technology make that possible.
Millennial Money for Purchasing a First Home
The demand for homes and the shortage of availability have harshly affected the average price for a home in 2021. Prices soared to 15% higher than this time in 2020, coming in around $350,000+ for a modest home dwelling.
Millennial homebuyers face hardship trying to budget on already low savings accounts.
College debt continues to soar, and millennials were the predominant generation to face steep loan amounts and high interest rates. It is common for a millennial to have $20,000 to $40,000 in debt from school loans alone. This is not accounting for the graduate students or specialized programs that included further years of schooling.
Further, this generation is entering the homebuyers network, having faced two major financial crises.
Many older millennials first found themselves facing horrible work conditions and few job opportunities during the economic slump of 2008. The effects continue in the workforce even today. Younger millennials continue finding a lack of work and well-paying positions.
2020 found the generation in a second economic downturn with the COVID-19 pandemic, displacing many from work. Even with government stimulus checks, millennials found it hard to cover high-cost living expenses as jobs disappeared.
Many say the financial crises make millennials a resilient generation. That resiliency has made its way into the millennial homebuyer's market.
The second stream of income has become common among millennials working towards their dream homes. Freelancing gigs and other 1099 work opportunities mean these individuals spend more than 9-5 to make a living. Yet that persistence pays off for real estate agents who find themselves dealing with millennials wanting it all in their homes.
The Final Word on Millennial Homebuyers
The millennial generation has faced many financial challenges and burdens in their lifespan, including two financial slumps and a global pandemic. Yet, the resiliency of the age group means the millennial homebuyer's market is thriving.
Family priorities and moving from big cities are two trends making millennials turn to homeownership. Real estate agents can capitalize on aging millennials, interacting with an audience now taking the market by storm.
If you are one of those millennials, let us help by connecting you to expert real estate agents who can make a dream home a reality.