Millennials make up a third of the United States’ population, and are changing the residential real estate market. Worries that the younger generation—purveyors in the sharing economy and perceived to prefer renting to buying—don’t want to buy homes are dissipating.
A recent survey conducted by Better Homes and Gardens showed nearly 80 percent of millennials see owning real estate as their number one priority.
“It’s the ultimate status symbol of this generation,” said Sherry Chris, Better Homes and Gardens CEO, at a Global Luxury Summit panel hosted by the Asian Real Estate Association of America at the Waldorf Astoria Sunday. “We were worried the downturn scared them away.”
Whether or not these younger buyers can afford to make the purchase varies. Some are borrowing from their parents to make the down payment. In college city Cambridge, says Keller Williams broker Jessica Ye, parents of international students are often buying properties for them through the first semester.
Others have come together in groups to buy multiple investment properties. But there are millennials buying luxury properties on their own at ages as young as 23 or 24.
Not only are they very interested in purchasing real estate, but they especially want luxury real estate, Chris said.
Milennials are looking for things like built-in cappuccino machines, steam showers, and wine cellars. However, size is not a big concern for these buyers. They’re willing to trade in square-footage for customizable homes, upgrades, and amenities.
Raquel Quinet, a Keller Williams team leader in Phoenix originally hired to turn around the office, says millennials are also apt to buy multiple homes, in many different parts of the country.
“They won’t buy ultra-big, but will have multiple homes and rent them out of Airbnb,” panelist Quinet said.
While baby boomers thought about their lives as “one-phase,” millennials are very interested in planning out their whole lives, according to the survey.
Condos tend to be the product of choice for these younger buyers because luxury condos are cheaper than other luxury homes. They are also either busy young professionals or full time students, and require properties that don’t need extra work.
They have also chosen to forego traditional layouts and require rooms to be multi-purpose.
“I’ve seen a pool table in the dining room,” Chris says.
They tend to require rooms to serve dual purposes, and developers marketing new properties have taken to staging rooms this way.
“Paper is passe,” Chris says.
Millennials have also driven the industry’s shift to digital. The favored mode of communication is text message, panelist say, and millennials don’t like to spend a lot of time talking.
They’re actually easier to work with, Quinet says. “It’s so fast, so quick, and sometimes it’s all through text.”
Even the signing of the contract. Many of her clients have never met the team in person.
Quinet says she has a requirement that her team responds to clients within five minutes. Panelist Caron Ling of Hawaii Life says a text back within two hours is crucial, at least to acknowledge the message was received.
Millennials are proactive homebuyers who do their research on properties and agents before approaching an agent. Today, listings are available to everyone, so the service an agent provides is ever more important.
However, the buyer might not be as familiar with the escrow process and what happens after the contract is signed. Quinet says her team created seven “what’s next?” videos she emails to her clients, who so often sign the contracts on their mobile phones, while out of town.
Technology is not a substitute for service, she said, but it can help make the process more efficient. Millennials always want to know what’s next, Quinet said, and the videos answers a lot of those common questions. Afterwards, the team follows up with a needs analysis phone call.