Millennials aren’t living like their parents lived. Due to a combination of economic, political, and social factors, Millennials are living and experiencing the world differently, all while reshaping the real estate market.
Trends in real estate are constantly changing with the economic and social climates and can even vary in different hyperlocal regions. Across the board, Millennials seem to be building upon their futures, and the real estate industry is anticipating their next moves.
Current trends show that 50% of Millennials rent. Yet, as Millennials age, start families, and are offered higher paying jobs, they are more inclined to buy. Indeed, the Gen Y generation has put off major life milestones like homeownership and starting a family later in life than previous generations. Yet, 2016 saw Millennials become the largest home buying group in the United States.
Move up Properties
Instead of buying fixer uppers like previous generations, move-up properties are in hot demand for the Millennial generation. Many Millennials are willing to pay more for homes that need fixing up.
A Focus on Metro Areas
The overall global shift shows that by 2050, over 70% of the world’s population will live in urban areas. According to a report from Nielsen, a large percentage of Millennials are trading country and suburbs for urban areas.
The National Association of Realtors (NAR) identify the top ten markets for Millennials are:
- Austin, Texas
- Charleston, South Carolina
- Denver, Colorado
- Minneapolis, Minnesota
- Ogden, Utah
- Portland, Oregon
- Raleigh, North Carolina
- Salt Lake City, Utah
- Seattle, Washington
- Washington, D.C.
So What Does this Mean for Real Estate Developers?
Real estate developers need to focus on revitalizing downtown areas, neighborhoods, and homes in the suburbs that appeal to Millennials sensibilities. In some cases, this means developing appealing areas with an engaging look and feel. Here are some construction considerations real estate investors and builders should keep in mind when marketing to Millennials:
- Location, not size — It’s all about location of the home than the actual home itself. Smaller homes in active, trendy, or up-and-coming areas are likely to appeal more to the Millennial generation than a larger home on the outskirts of town. Although many Millennials are moving into cities, many first-time buyers actually buy in the suburbs because it’s cheaper.
- Open, multi-functional spaces — The ability to socialize and live casually is a major draw for Millennials. Homes with fewer partitions and walls can allow for better entertaining and communal spaces. Millennials appreciate being able to manage materials, so therefore, spaces that are more versatile will be attractive because they seem resourceful. Rooms that serve many purposes, rather than one, can show the long-term benefit of a housing investment.
- Minimal upkeep — Many Millennials work long hours and have a broad range of interests. The demographic largely prefers properties that require minimal care. Homes and condos that incorporate small balconies, terraces, patios, or even plots of grass may be more appealing than large yards with lush landscaping that need constant or ongoing care.
- Tech advancements — Millennials want modern conveniences in their homes, such as appliances that help them manage daily tasks. It makes their lives easier and more accessible. In fact, 56% of Millennials said tech capabilities are more important than curb appeal.
Millennials are changing the way homes are designed and marketed. As these new trends evolve, real estate developers have to adapt to meet the demands of this new buyer. The future, however, looks promising as these trends are ecologically sound, while delivering plenty of opportunity for developers.