Millennial Homebuyers Are Not Who You Think They Are
Homebuyers 37 years old and younger make up the largest portion of homebuyers
Millennials: Yes, they eat avocado toast; yes, they love their phones; and yes, they’re shopping for homes.
Homebuyers 37 years old and younger make up the largest portion of homebuyers (36 percent) according to the National Association of Realtors. Despite being strapped with unprecedented levels of student debt and experiencing the 2008 housing market crash, Millennials are ready to leap into homeownership.
But who are they and what do they want?
A new study from Clever Real Estate surveyed more than 1,000 U.S. home shoppers to get to the bottom of what the illusive and often misunderstood Millennial homebuyer really wants.
79 PERCENT OF MILLENNIALS ARE FIRST-TIME HOMEBUYERS, BUT THEY ARE PLANNING LONG-TERM
Unsurprisingly, almost 80 percent of Millennials ages 18 to 34 are first-time homebuyers. They’re unfamiliar with the process, and 61 percent are working with a real estate agent to help them. However, 39 percent of Millennials aren’t using a real estate agent, which indicates many Millennials don’t know sellers typically pay buyer agent fees.
These buyers are inexperienced, but they are also tech-savvy, using online resources to do their own research. Nearly 75 percent of Millennial respondents are using online listing sites like Zillow and Redfin to research and find homes.
While many Millennials are new to the home buying process, they aren’t looking for starter homes. Millennials are thinking long-term about their first home; most respondents prioritize neighborhood safety (38 percent) and a quality school district (35 percent) over walkability (11 percent) and short commutes (11 percent).
Many respondents were looking for “more space” and “a forever home.”
In other words, the Millennials buying $8 chai tea lattes and looking for cute 500-squar- foot downtown apartments aren’t the ones buying real estate.
MILLENNIALS ARE LOOKING FOR AFFORDABLE HOMES THEY CAN FIX UP
Millennials between the ages of 25 and 34 have an average of $42,000 in debt, so they need to be realistic about how much they can afford. More than two-thirds of Millennial surveyed said they’d be willing to put in an offer on a fixer-upper that required major repairs, and more than half are looking for homes that are less than $200,000.
However, Millennials might be taking on more responsibility and hurting their financial stability in the long run. Homeowners spent an average of $6,649 on home improvements per household in 2018, and the average kitchen remodel costs $22,145. Millennials eager to buy homes should be aware of the true costs of homeownership (especially on a fixer-upper!)
84 PERCENT OF MILLENNIALS BELIEVE HOMEOWNERSHIP IS PART OF THE AMERICAN DREAM AND A GREAT INVESTMENT
While many Generation Xers and Baby Boomers are looking to settle down in a quiet single-family home, Millennials are planning on buying multi-family homes that can generate income and help cover their mortgage. Millennials are 52 percent more likely than older generations to purchase a multi-family home.
Millennials are straddled with debt, and they understand real estate investing can be a viable path to financial freedom. About 43 percent of Millennials believe buying a home is more affordable than renting, and another 43 percent believe real estate is a good investment.
In spite of the challenges Millennials face, an overwhelming majority believe homeownership is part of the American Dream. Their path might be rocky, expensive and filled with holes in their roof, but Millennials are still finding ways to break into the housing market.
Tommy O’Shaughnessy is a research analyst at Clever Real Estate who conducts surveys, analyzes data and studies trends to understand the real estate market.