Here's what millennials are looking for as homebuyers
They're here. For years, real estate agents and builders eagerly anticipated the entrance of millennials into the housing market.
Millennials, a generation now larger than the baby boomers, were battered by the financial crisis as they started their careers, which delayed some of the milestones that accompany homeownership, such as marrying and starting a family. But in 2018, millennials represented the largest cohort of homebuyers at 37%, according to the National Association of Realtors' 2019 Home Buyers and Sellers Generational Trends Report.
While it's difficult to generalize about what the Pew Research Center estimates are more than 73 million Americans, real estate agents and observers see some trends among millennials.
"Millennial homebuyers are often looking for a lot at first, and then they're scaling back as they start searching for a home because of high prices and the limited selection of homes in most markets," says Danielle Hale, chief economist for Realtor.com.
Despite the obstacle of low inventory of homes on the market, millennials are not likely to compromise on the condition of the home, which Hale says is in part because of their lack of experience as homeowners.
Brian Kee, 36, and his wife, Eliana Kee, 33, purchased a three-bedroom, townhouse-style condo for $515,000 in the Shirlington area of Arlington, Virginia, upgrading from the nearby condo they owned for six years now that they have a child.
While the Kees looked at single-family houses in Arlington and nearby Virginia communities of Falls Church and Springfield, they ultimately settled on a townhouse about 200 feet from where they already lived, Brian Kee says.
"The single-family homes we saw were small, needed a lot of work and sold fast," he says. "We liked one in Springfield but realized we would need a second car, so the savings we would achieve by moving farther out would be spent on the car."
Eliana Kee works at home on her photo business and takes care of their child, while Brian commutes into the District via bus or Metro.
"For us, the neighborhood and commute were more important than the size of the place," Brian Kee says. "We also like that it was move-in ready, and we didn't have to do any work."
"Millennials want almost instant HGTV-approved living," says Michelle Sagatov, a real estate agent with Washington Fine Properties in Arlington. "They're not usually willing to put in elbow grease on making something their own through a renovation. As long as it's on trend enough, they're happy to just bring their furniture and their toothbrush and move in."
'Sense of community'
Understanding the priorities and preferences of millennial buyers is important to developers and to home sellers who want to target buyers in that age range.
"I tell sellers that there's a 'three-strike' rule with a lot of buyers: If they have to change three things right away, that's a dealbreaker," Sagatov says. "Buyers don't want to have to do any renovation, especially not right away."
Millennials range in age from their mid-20s to their late-30s, which means that some are early in their careers while others have more buying power and need space for a family.
"As a whole, millennials are very interested in a sense of community and place a priority on the neighborhood," says Kerron Stokes, a real estate agent with RE/MAX Leaders in Denver. "Younger millennials in Denver are often buying their first condo or a house where they can bring in roommates to share expenses. Older millennials are selling their urban homes and moving toward the suburbs where they can be closer to the mountains and to good schools."
Pets are more important to urban millennials than parking, says Trent Heminger, a real estate agent and executive vice president with Compass real estate brokerage in Washington.
Millennial buyers looking at condos ask if the building is pet-friendly and if there are any weight or other restrictions, Sagatov says. If they're looking at a townhouse or single-family house, they want a yard for their dog, even if it's small.
"Most buyers put their family's needs first when looking for a home to buy," Hale says. "For younger millennials who haven't started a family yet or even those who do have kids, the family pets are also a priority. That's one reason many young buyers want an outdoor space."
Millennial buyers who have been living in luxury rental buildings have high expectations for amenities that they have to revise once they realize that fewer condos have those amenities and those that do have high condo fees, Heminger says. Once they realize that owning means they may have to give up things such as a rooftop pool, millennials tend to prioritize the ability to have a pet and some outdoor space over other features.
Tech-savvy millennials like the convenience of technology that they can control remotely, Heminger says, such as the ability to buzz someone in to deliver a package or someone who will walk their dog.
"Millennials grew up in the digital age, which gave them a thirst for instant information at their fingertips and virtual communication," Stokes says. "Appliances such as smart thermostats, smart doorbells and more that can be controlled from an app are all the rage. Connectivity is king when putting a house on the market these days."
A simple step that sellers can take is to swap out standard outlets for ones that include USBs for charging, Stokes suggests. A USB outlet costs $7 to $9 per switch, he says.
"Constantly being on a smartphone drains a lot of power," Stokes says. "When your home offers a charging hub or outlet for people, especially in unconventional rooms like the kitchen, they are more likely to stop and take a second look."