Selling To Generation Y: What Millennials Want In A Home
Sidney Richardson7-Minute Read
December 09, 2020
It’s official – millennials now make up the largest portion of home buyers. With this generational shift, the way home buying is done has started to evolve. It would be no exaggeration to say that millennials are changing the housing market. So, what do they want in a home?
Read on for our insights on millennial buyers and their preferences.
Where Generation Y Stands
Millennials, also known as Generation Y, are the children of the baby boomer generation. Millennials were born between 1980 and 1998 and are mainly characterized by being the first generation to grow up with the internet.
Generation Y is sometimes split between “older millennials,” born 1980 – 1989 and “younger millennials,” born 1990 – 1998. This divide separates millennials thought to be “digital natives,” or adept with the internet and new technology, from older millennials who might relate more to their baby boomer parents when it comes to life and technology use.
One thing that all millennials have in common is a challenging start to adulthood. While their baby boomer parents started adult life in a thriving economy, many millennials entered the workforce during or after the Great Recession of 2008. Finding jobs that will pay a livable wage has become more difficult for millennials, especially with more student loan debt than ever before. Almost a fifth of college graduates today have $100,000 or more in debt, according to the National Association of REALTORS® (NAR).
As if the hefty student loan payments were not enough, millennials also have to deal with rising real estate costs and plateauing salary increases. Despite all these hurdles, however, millennials are finally starting to buy homes. While Generation Y may have gotten a rough start, it’s a misconception that millennials have less purchasing power than the generations that came before them.
With their unique circumstances, though, the things millennials are looking for in their homes are a little different than what their parents may have sought after. Millennials are looking for smaller, more affordable homes that feature low-maintenance outdoor spaces in vibrant neighborhoods. They’re uninterested in the large, outdated houses of their parents and are instead seeking out more modern and energy-efficient places to live.
According to the NAR, the median home price for younger millennial buyers is $206,300 at a median size of 1,600 square feet. The median home price for older millennials is a little higher at $282,000 and at a median size of 1,900 square feet. Though 1,600 – 1,900 square feet is not an exceptionally small amount of space, it’s also not as large as the 3,000-plus-square-foot homes that many baby boomers bought and raised their families in.
Besides buying smaller homes than their parents, millennials are also making smaller down payments. Additionally, about 27% of millennial home buyers use gift money from a friend or relative for their down payment rather than money from their own pockets.
So, overall, millennials are focused less on the size of their homes and more on “quality over quantity” in terms of their house and the surrounding community. Despite this focus on modernity and location, however, millennials don’t plan on staying in the homes they choose for long. NAR surveys found that millennials’ median length of stay is just 10 years, compared to the 20 years of older generations.
Where Millennials Want To Go: Homeownership Priorities
Millennial home buyers are working with different circumstances than the generations that came before them, and with different circumstances come different priorities.
In the past year, 63% of millennials found their home on the internet, compared to 41% of all other generations. As the first generation of home buyers to grow up with the internet, millennials are more likely to utilize online resources in their search for a house than any previous generation. This new emphasis on having a strong online presence as a seller speaks to the impact of millennials on the housing market as they slowly become the new majority among home buyers.
Being able to find a home online is just one perk that millennials are looking for. Below are a few more things millennial buyers are prioritizing.
Location is an extremely important factor in the average millennial’s choice of home. Generation Y places a lot of importance on community, so finding the right neighborhood is a necessary step for many millennials. Commuting costs are also very important to millennials. Generation Y, for the most part, wants to be within walking distance of urban amenities such as good schools, parks and stores. Cities like Seattle, Washington and Austin, Texas have seen a large increase in millennial residents in part because of factors like walkability and city culture.
Not all millennials prefer to live in cities, though. Older millennials are beginning to get married and start families. With the rising costs of city living and raising children, some millennials are fleeing to the suburbs for more space, more affordable options and access to public transportation into the city. According to the 2020 NAR Community Preference Survey, in a post-COVID-19 world, 56% of millennials with children would prefer backyards to proximity to urban centers.
Millennials are a budget-conscious generation, so low-maintenance features are a big priority when buying a house. Renovations and aspects of the home that require regular upkeep cost both money and time, which Generation Y may be unwilling or unable to spend.
Millennials will tend to avoid homes with outdated fixtures, so sellers targeting them might install new fixtures such as energy-efficient light bulbs and stainless-steel kitchen appliances. Easy-to-clean counter surfaces such as granite and other natural stone options are a favorite of Generation Y as well.
Drought-friendly landscaping is another low-maintenance feature that millennials living in dry climates may appreciate. Maintaining a lawn is not only costly and time consuming, it can also use a lot of water and be environmentally unfriendly. Dressing up the yard with rocks, gravel, bricks and drought-tolerant plants can be a great eco-friendly and lower maintenance solution to taking care of grass.
Besides the costs of yard maintenance and renovations, millennials are also eager to avoid high energy bills. Homes with metal or cool roofs and energy-efficient windows are often sought by millennial buyers. By keeping the home warm in winter and cool in summer, these energy-efficient options reduce additional costs and maintenance that Generation Y doesn’t want to deal with.
For millennials, bigger is not better. Generation Y wants quality over quantity in their homes and doesn’t mind trading space for better amenities and energy efficiency. Function and simplicity are some of the biggest priorities of millennial home buyers – so it’s no surprise that many of them are fans of minimalism.
Millennials want their homes to have open floor plans and clean, simple design. For Generation Y, cluttered spaces and outdated styles are red flags. They don’t want to have to renovate their home to open up the floor plan or fix an “ugly” kitchen. Painting dark walls, cabinets and other features white or light neutral colors can brighten a space and make it more approachable for this demographic.
Shifting to a simpler, more modern look won’t do much, though, unless you have the photos to prove it. Since most millennials prefer to conduct their search for a home online, it’s more important than ever for sellers to make sure they are having professionals take staged photos for listings. Nice photos that show off the open space or natural light in a home can do a lot to draw in potential millennial home buyers.
Millennials are a naturally tech-savvy generation, having grown up during the rise of the internet. They want a home that fits their tech and internet needs – which vary from person to person. One good starting point, though, is making sure houses being sold have a good home office, strong internet connection and good cell phone reception. Millennials don’t use landline phones, so rural homes with poor internet access or cell phone reception may not look very attractive, especially with more people working from home than ever before.
Beyond the necessity of solid internet speed and good cell phone reception, smart home features can also be a good idea. There are smart thermostats that change the temperature based on whether someone is home in order to save on the energy bill that could appeal greatly to millennials looking for energy efficiency. Smartphone-controlled light and security alarm systems are also increasingly popular for their ease of use and “hands-off” approach.
Millennial home buyers aren’t satisfied with access to public parks and spaces as they grow older – they want outdoor space at home, too. Like we mentioned, over half of millennial parents would prefer to have a yard for their child to play in, but children aren’t the only driving factor for millennials seeking outdoor space. According to a report by market research firm Packaged Facts, 37 million millennials own pets that need room to run, so a yard is an important feature.
With social distancing measures in place due to the COVID-19 pandemic, outdoor space may be even more important than ever to Generation Y. Having space to enjoy the outdoors with family or pets is invaluable during a time when many are staying home and staying inside for much of the day.
Millennials’ Impact On The Housing Market
With their unique circumstances, preferences and outlook, the millennial generation is set to bring big changes to the housing market as they become the main group of buyers. Climate change-conscious millennials are starting to avoid places with rising temperatures, frequent fires and high costs of living such as California in favor of smaller and more sustainable areas. They are also increasingly populating urban suburbs rather than cities now that they’ve begun to start families.
In addition, with increased interest in smaller homes, the equity of starter homes is likely to increase as demand becomes higher than supply. The larger homes of the baby boomer generation may become increasingly difficult to sell as well with their outdated styles and more expansive square footage.
Sellers’ investments in energy-efficient features, though, are likely to start paying off. Homes with energy efficient windows, solar panels and metal roofing are attractive to many millennial buyers looking to save on their energy bills.
In general, the housing market is moving away from the preferences of baby boomers and toward the demands of millennial home buyers, who are increasingly seeking more eco-friendly, modern and easy-to-maintain places to live. In the future, we will likely see fewer “McMansion”-style homes and more small, simple and easy-to-maintain places instead.
Bottom Line: What Millennials Look For In A Home
As the most tech-savvy and environmentally conscious generation of home buyers yet, millennials want homes that are small, simple, sustainable and easy to find and look at online. Selling to millennials doesn’t have to be difficult – making your space look simple and clean is a great first step in the right direction.
If you’re ready to sell your home, contact us to get connected with a Rocket Homes℠ Partner Agent today.