Just like Uber and Lyft have turned the future of car ownership upside down, those looking to stay ahead of the curve in the real estate market are looking for ways to adapt the concept of homeownership to fit into the less traditional millennial lifestyle.
While the concept of timeshares seems to have lost favor with the public at large, those looking to disrupt the traditional real estate market might look to apply aspects of the timeshare concept to capture the millennial homeownership market.
With the growing trend toward changing jobs more frequently and the corresponding need to relocate more often, fractional real estate ownership could potentially serve the needs of the modern mobile homeowner.
Similarly, others are exploring modular homes as a possible new growth area.
The first step, however, is coaxing reluctant first-time homebuyers into the market.
According to this recent survey commissioned by Northshore Fireplace, 65 percent of millennials believe homeownership to be a “choice” rather than a necessity. In that vein, hybrid real estate agencies like Purplebricks or online agents like those that have taken off in the U.K. are appealing to the newest generation of homebuyers given the emphasis placed on digital data and online search tools, not to mention the savings offered by the flat-fee seller’s commission.
“When the real estate market is rallying, discount brokerages of many stripes come out of the woodwork,” says real estate market expert Andrea Scott of Alain Pinel Realtors, which was acquired by Compass earlier this year.
On the other end of the spectrum, full-service real estate firms are now offering a broader range of services such as short-term loans to clients to avoid the stress of timing the sale of their current home to the purchase of a new home, as well as loans to advance the costs of remodeling or staging a home for sale to entice millennials to trade up once they enter the homeownership ranks.
Everything from the look, functionality and the way we insure homes are apt to change.
In those cities and countries where food delivery apps are the new dinner norm, developers are offering kitchens better suited to those dining in them but not actually cooking.
While luxury appliances are still a must on homebuyers’ wish lists, storage and working space are sacrificed to make room for extra dining space.
Although home automation is a relatively new concept, it has quickly become another must-have feature that millennial buyers consider essential. A study conducted by Coldwell Banker Real Estate showed that 61 percent of millennials are willing to pay extra for a home or rental that comes with smart home technology.
With some predicting that car ownership will decrease dramatically in the next decade, some home features that have historically been considered very attractive such as garages and off-street parking might be traded for home office space for the increasing remote workforce.
Many would consider the insurance industry to be one of the last bastions of the old-world business model.
Yet even the insurance industry is bracing for change. Tapping into the sensibilities of the next generation of homebuyers, the insurance startup Lemonade recently launched a new concept for home and renters’ insurance, marketing itself as “powered by tech and driven by social good”; two factors that strike a chord with the targeted demographic.
If change has reached the insurance industry, it is only a matter of time before we can expect to see similar efforts at revamping mortgage banking and other aspects of the real estate industry.
So while the American dream of homeownership will likely survive, some of the more traditional concepts associated with homeownership, including the white picket fence, might just have to go.
With these real estate trends in mind, brokers and agents would be wise to consider the demographics of their client base when tailoring their marketing strategies, creating an online presence and identifying the properties best suited to their buyers’ lifestyles.
Similarly, real estate professionals should be prepared to deal with the increasing public expectation of reduced commission structures given the growing prevalence of online and hybrid agencies, as well as the media attention received by the recent filing of an antitrust class action suit against the National Association of Realtors (NAR) and a number of national real estate brokerages associated with the Buyer Broker Commission Rule.
With these concerns looming, brokers and agents should look to develop and offer personalized services that cater to their clientele and give the added value that millennials and other cost-conscious clients will be looking for from a full service agency.
Lisa Boswell, Esq. is an attorney at the law firm of Early Sullivan Wright Gizer & McRae in Los Angeles. Connect with her on LinkedIn.