Real estate professionals have been patiently waiting for millennials to enter the real estate market. Now, they’ve finally arrived.
For years, several social and economic factors have caused millennials to postpone major life milestones such as marriage, having children and homeownership. Older millennials entered the workforce during the financial crisis of 2008, and over the past decade, the costs of living and education have significantly increased.
Recently, though, there has been a shift. Since the beginning of the pandemic, millennials have started entering the residential real estate market at higher rates than ever before. Historically low interest rates, advancements in remote work and growing families have motivated many young adults to stop renting finally.
Today, millennials make up the largest population of homebuyers in the U.S., according to the National Association of Realtors’ 2020 Generational Trends Report. Therefore, it’s important for agents to understand where, how and why millennials are searching for homes. Here are a few tips to help you tap into this massive buyer pool.
Give them space
Millennials are looking for bigger homes — and bigger backyards, for that matter. After sheltering-in-place for more than a year, the idea of renting a tiny, expensive apartment just to be downtown has lost its appeal for many young adults.
Living in the city is simply not the same when you can’t dine out, attend events and people-watch in the park.
Additionally, now that many companies have adopted remote work and millennials are starting families of their own, these young homebuyers are searching for greener pastures.
The average size of a home that millennials are searching for is around 2,400 square feet — a 41 percent increase from before the pandemic. They want more room to work and play and are also looking for plenty of room for their pets to run around, considering that 70 percent of them have a pet.
Offer ways to save
Although many millennials are excited to enter the housing market, most of them also suffer from financial anxiety over such a large purchase.
According to Clever Real Estate’s 2021 Millennial Home Buyer Report, 52 percent of millennials have stress and anxiety about buying a home, mostly for financial reasons. Agents who can offer ways to save, such as homebuyer rebates (in states where it’s permitted) or partnering with a discount broker, can help bring in more business for themselves.
Give yourself a digital makeover
Millennials grew up using technology and are used to having all the information they need at their fingertips. They largely depend on the internet and digital resources to search for homes, so it’s important that agents’ online presence meets millennial expectations.
Make sure you have a beautifully designed, user-friendly website that showcases your services and properties. There are plenty of resources such as Wix and SquareSpace that make it simple for anyone to build a website, even if it’s just a simple one-pager. Millennials also use social media to search for properties and services, so agents should have a presence (with high-quality content and photography) on Facebook, Instagram and even TikTok.
Although many millennials feel ready to purchase a home, they can often be surprised by the price tag. Clever’s homebuyer report revealed that 56 percent of millennials want homes under $250,000, yet the average U.S. home value is currently $266,104.
Given this obstacle, young adults are not shying away from homes that might need a little (or a lot of) elbow grease. More than 7 out of 10 millennials in Clever’s report said they would be willing to buy a fixer-upper.
As an agent, it’s your duty to keep your client’s best interests in mind. Make sure they truly grasp the risks and understand the amount of time and money that goes into such a project. For instance, even the cheapest roof replacement for a small house that just needs shingles could run a buyer more than $4,000. Renovations add up quickly, and a dream property can quickly turn into a money pit.
To help their millennial clients out, agents can offer advice on choosing a home warranty or negotiate one into the final deal with the seller.
Take student loans into account
The current total outstanding federal student debt is $1.5 trillion, and millennials share a large portion of this burden. According to Clever’s millennial homebuyer report, 80 percent of respondents said President Biden’s proposed $10,000 student loan forgiveness program would impact their finances.
Committing to a mortgage when you already have a significant amount of debt can seem scary or even unrealistic. Agents should take this into consideration when helping first-time homebuyers search for properties and lenders. Consider offering tools on your website, such as a student loan repayment calculator.
Become a trusted resource
Millennials have faced many financial obstacles when it comes to homeownership. Positioning yourself as a resource on all the things a new homebuyer should know will make you stand out from the competition. Agents can create resources that explain first-time buyer assistance programs, mortgage options and closing costs for buyers.
For example, more than two-thirds of millennials say they cannot afford a 20 percent downpayment on a house and view it as a huge barrier. Yet, according to the National Association of Realtors, the median down payment for first-time buyers in 2019 was only 6 percent. Making sure they understand facts like this can make buying property seem more attainable.
In Clever’s millennial homebuyer report, 80 percent of respondents said homeownership is part of the American dream. Agents can help make this dream a reality by listening to young adults’ needs and understanding their potential barriers to buying a home. Ultimately, agents who go the extra mile to help millennial homebuyers achieve their goals will come out ahead in the long run.