Millennials more likely to choose limited service

Buyers ages 32 and younger more confident their home purchase is a good investment

Home sellers who are 32 or younger are more likely to use a real estate brokerage that provides a limited set of services rather than a full-service brokerage, according to a new survey from the National Association of Realtors released today.

The 2013 NAR Home Buyer and Seller Generational Trends report studied the generational differences of 8,501 homebuyers and sellers who purchased their homes between July 2011 and June 2012, according to county records.

Gen Y  image via Shutterstock.
Gen Y image via Shutterstock.

About two-thirds of millennials, those born between 1980 and 2000, used full-service brokers to list their homes, but the remainder, 34 percent, used a limited-service broker, including discount brokers, or a minimum-service broker that listed a home in the local multiple listing service but provided few, if any, additional services. This is “presumably because they have less equity in their home,” the report said. By comparison, at least 80 percent of those ages 33 to 87 used a full-service broker.

Millennials, also known as Generation Y, were somewhat more likely to sell their homes themselves as for-sale-by-owner properties, or FSBOs. Thirteen percent sold their home as a FSBO, compared with less than 10 percent among those ages 33 to 57, and 67 to 87. Those ages 58 to 66 were nearly as likely to sell their homes as FSBOs at 12 percent.

The overwhelming majority of all buyers except those 88 or older used the Internet to search for homes, though younger generations were more likely to report that they found the home they purchased online rather than through a real estate agent.

Older generations were more likely to report that they found the agent they used to search for or buy a home online. For instance, 41 percent of buyers ages 67 to 87 said they found their agent online, compared with 30 percent of those 32 and under, though millennials were more likely to request information as a result of their online home search.

Buyers of all ages who used the Internet to search for homes found photos to be the most valuable among website features, followed by detailed information about properties for sale. Real estate agent contact information was most valuable to those ages 67 to 87 and least valuable to those 33 to 47.

More than half of millennials, 58 percent, reported using an MLS website in their home search — a higher percentage than any other age group. About half of all buyers under age 88 reported using realtor.com in their search with younger generations somewhat more likely to use the site. About equal shares of all buyers reported using real estate agent websites or real estate company websites.

Just over a quarter, 27 percent, of all buyers reported using “other websites with real estate listings” with millennials somewhat more likely (31 percent) to use them. “Mobile or tablet apps” and “mobile or tablet websites” are listed as separated options and therefore it is unclear whether mobile users targeted industry or third-party websites. A fifth of millennials reported using each.

Gen Y buyers were more likely to consider their recent home purchase a good financial investment than any other age group: 85 percent compared with 64 percent among those ages 67 to 87. The overwhelming majority of millennials said they viewed their home as an investment better than or equal to stocks.

“Homeownership is an investment in your future, and is how many younger American families begin to accumulate wealth,” said Paul Bishop, NAR vice president of research, in a statement.

“The oldest of the millennial generation are now entering the years in which people typically buy a first home, and despite the recent downturn, homeownership still matters to them. The sheer size of the millennial generation, the largest in history after baby boomers, is expected to give a powerful boost to long-run housing demand, though in the short-term mortgage accessibility and student debt repayment remain challenges.”

The largest group of recent buyers were part of Generation X, born between 1965 and 1979, with 31 percent of recent purchases, followed by millennials at 28 percent, NAR said. Younger boomers, born between 1955 and 1964, made up 18 percent of purchases, and older boomers, born between 1946 and 1954, made up 14 percent. The Silent Generation, born between 1925 and 1945, accounted for 10 percent of purchases.

Nearly 8 in 10 (79 percent) millennials were first-time homebuyers compared with 39 percent of all buyers.


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