My 26-year-old son convinced me that millennials actually desire to be homeowners. When he was 16, he confided that he was looking forward to someday being a father and owning a home but wasn’t sure how he would be able to accomplish that.
This was over a decade ago, when experts were predicting that his generation would never be interested in homeownership because they wanted “freedom.” Millennials may be slower than previous generations to hit traditional “adulting” milestones like buying a home, getting married or having children, but the tide is turning, even through the pandemic.
Real estate professionals need to prepare for the shifting expectations and preferences of younger generations who will increasingly dominate the U.S. housing market for the foreseeable future. As Investopedia recently noted:
“The economic recovery over the past decade has been good for many Americans, and one of the effects of this is a surge in home buying among Millennials. Those in their late 20s and early 30s, in particular, are leading the charge, with homeownership rates among these groups up to two to four times higher than other age groups during the years 2014–2016, according to a research report by Fannie Mae.”
Millennials, for example, are doing away with many of the traditional home elements their parents valued. Trends among millennials include a penchant for multifunctional and community spaces, and homes with sustainable — and more modern — elements.
What about Generation Z?
According to Forbes, Generation Z will soon account for 40 percent of all consumers. This cohort was born beginning in the mid-1990s. Millennials and Generation Z may seem similar to some of us among older generations, but they unequivocally have differences.
Millennials were young just as the internet took off. For Generation Z, online existence is all they know. They’re constantly connected to TikTok and Snapchat. Millennials prefer Instagram and some use Snapchat, but they largely eschew Facebook.
Forbes also reported on housing preferences among millennials and Gen Zers, particularly in the era of COVID-19. “As young people look to their spaces as mental health retreats, at-home items and services that comfort, declutter, or foster a feeling of escape from the outside world will resonate.” In other words, they are beginning to form relational households, and they’re looking for their sanctuary.
What will happen post COVID-19?
YPulse reported that 48 percent of those ages 19 to 37 who rent or live with parents are putting off homeownership because of COVID-19. There is a lot of opportunity to market to both groups. Remember to know your audience and how to best appeal to them.
A trend to note is that more urban millennials are considering or planning a move to a suburban or rural area. YPulse’s data showed that the top reasons for this decision are: lower housing costs, low crime rates, being close to friends, the ability to afford a larger home and having more outdoor space. As the report stated, “Moving out of cities is also becoming a dream as some plan for a new future.”
Reports like YPulse’s also show that the pandemic has led a majority of Gen Zers to indicate they enjoy being able to spend additional time at home. While we all tend to veer toward the comfort of our personalized homes and environments, the “comfort” element of the home is quite possibly going to make younger generations more likely to purchase homes faster.
How to approach transactions with younger generations
Young buyers will have a lot of questions as transactions become increasingly complicated, and this is a generation that demands transparency. These consumers want to feel in control, but they acknowledge they need a guide they can rely on and trust.
Provide them information and options, but let them make the choice. They care most about information and know how to find it at their fingertips — meaning they’ll probably have a back-up plan in case the relationship doesn’t work out. Becoming their trusted advocate could provide a career-worth of loyalty.
Find out what’s important to them and what’s high on their homebuying checklist. Make sure that they stay true to that checklist — with some flexibility, of course. Since younger generations tend to do their own research, they probably have some idea of what’s attainable and what’s not.
Help them become homeowners by interpreting and leveraging data, staying connected in the ways they want to, and being a resource for home-related services and vendors. This will earn you a positive reputation among young homebuyers, and they’ll spread positive word-of-mouth. You can leverage their digital presence by asking your clients for shoutouts to their followers and friends about your service.
Generation Z is certainly a new breed of buyer, and as we all know, we have to evolve with the times — and the customer. Now more than ever, find that digital and competitive edge to remain relevant and outshine competitors.