The Millennials are here – and rocking the real estate market.
As the generation born between 1981 and 1996 comes of age, there are significant shifts in behavior, lifestyle, and needs. Most millennials are paying off student loans, moving out of their parents' homes or their rental apartments — and buying their first houses.
A recent survey conducted by the National Association of Realtors (NAR) revealed that both Younger Millennials (22 to 30 years old) and Older Millennials (31 to 40 years old) make up 37 percent of the share of home buyers. There are many factors that contribute to the surge in millennials’ home buying share.
With changes to the economy brought on by Covid-19, a drop in interest rates, higher incomes, successful careers, and zero student debts, millennials find themselves amid a wonderful opportunity to buy a home.
What is on the horizon as millennials confront “middle age” and buy their first homes? We explore the Millennial generation’s impact on the house buying market, the elements, and influences that have contributed to the rise in their purchasing numbers – and more importantly, the things they want in a home.
What Exactly Do Millennials Want in Their Homes?
Compared to other generations, millennials are buying their homes later in life. But
now that they are comfortably settled in their careers, with higher incomes, and paid off student loans and other personal debts, millennials are finally taking the big step to buying their first homes – and making it a top priority.
After years of renting or living with their parents to save money for a future home, millennials know their options, and exactly what they want in a home. While there are some similarities to what their parents looked for in a home, there are features that clearly speak for their generation.
The three things that are top of mind when millennials consider potential homes are:
1. Affordability and space in the homes encourage millennials to buy in the suburbs despite their preference for city living. Another interesting fact about millennials is that they are happy with smaller homes and prefer to spend less money on a fixer-upper - and invest their funds in redesigning the space.
Older homes in the suburbs – like this Queen Anne – are attractive to millennials because of the possibilities of creating interior spaces and outdoor living areas to their specifications. Photo credit: Rexy Legaspi
2. Like most homebuyers, millennials also want big backyards and outdoor living spaceswhere they can relax and unwind; and entertain family and friends. A back porch or rear deck with a fire pit and grill, and space to grow flowers and vegetables are features that appeal to this group.
The covered rear porch that extends to the backyard of a 1.5-story Contemporary Farmhouse style home is the perfect space for families that love outdoor living. Here they can sit and relax around a fire pit, grow vegetables and/or flowers, and just enjoy the scenery. The 1,999-square-foot home includes three bedrooms, a powder room, three bathrooms, a huge kitchen, mudroom, main floor master suite, unfinished basement, and a two-car garage. (Plan #106-1328)
3. Millennials prefer open floor spaces that allow better flow. A Great Room that seamlessly connects the living and dining areas to the kitchen allows for informal hosting and entertaining. Having outdoor living spaces allows millennials and their families to move around the home and extend their gatherings/get-togethers to the rear porch or patio in the backyard.
With its open floor plan, this one-story, 2686 square-foot Country home is exactly what millennials want for casual entertaining. The huge Great Room with the modern kitchen is well-designed for social activities. The home includes four bedrooms, 2.5 baths, covered front, and rear porches, a laundry room, and a split bedroom layout. (Plan 142-1169)
4. A feeling of community in a great location is a constant across all generations. For millennials, it is important to find a home in a safe neighborhood where they can be part of the community. This may be why they prefer homes in subdivisions or tracts. They seek a location with good schools and a short commute to work. Other millennials whose new normal is work-from-home, ideal vicinities are those areas that have public amenities like gyms, community centers with workspaces, and cafes where they can work during the day.
Since millennials now comprise the largest demographic of home buyers, developers can provide them with the sense of community they are looking for by designing subdivisions that are within walking distance to schools, coffee shops, and fitness/recreation/arts centers. Another element of new builds that will appeal to millennials is the proximity to public transportation.
5. Millennials are big on customization and personalization in their homes. They like homes that combine traditional charm – such as Pre-War Colonials, Craftsman, Mediterranean, and Frank Lloyd Wright designs - with modern, innovative amenities. Show them game rooms, home gyms, and media rooms – and they are hooked.
A media room adjacent to the exercise room in a two-story Country manor plan is a very appealing feature for millennials who love dedicated specialty rooms. In addition to this, the 3,149-square-foot home has four bedrooms, three bathrooms, a powder room, a spacious open living room, a huge kitchen, a loft, and a basement. (Plan #161-1151)
6. Modern amenities that get the attention of millennials are kitchens, bathrooms, and high-functioning amenities like dishwashers, washers, dryers, and a space to exercise. They also want “smart” homes with automated security, heating, and cooling lights.
A study by the NAHB (National Association of Home Builders) showed that more than 80 percent of Millennials wanted laundry rooms, hardwood floors, patios, and garage storage.
Big Kitchens with huge kitchen islands and informal seating are a must for millennials who put an emphasis on cooking, hosting, and entertaining. Some of the “must-haves” in these kitchens are stainless steel dishwashers, sub-zero refrigerators, built-in wine coolers and microwaves, window seats, and built-in seating.
A kitchen made to order for millennials: spacious with an oversized kitchen island that includes a sink and comfortable sitting for four people (see photo below for another view) is one of the many amazing features of a Mid-Century Modern home. The three-bedroom home has 3.5 baths, a home office with its own private entrance for visitors, vaulted ceilings, an open floor plan, and an outdoor living space with a rear porch and an outdoor fireplace.
An alternate view of the home’s large, bright, and airy kitchen shows the seating plan. (Plan #202-1014)
When it comes to bathrooms, millennials are partial to these modern features: a dedicated dressing room/makeup area, his and hers baths, and whirlpool tubs.
The luxurious master bath in this one-story Craftsman style home features a huge shower, a makeup area,
… and a free-standing tub that will attract the millennial buyer. The one-story, 2,650-square-foot home has three bedrooms, 2.5 baths, an open floor plan with a Great Room, dining area, kitchen, a covered back patio that accommodates outdoor activities and entertaining. (Plan #161-1119)
Millennials are likely to have a Smart Home. For this technology-inclined group, the capability to interact with their homes as they do with smartphones is an exciting prospect. There are many gadgets designed to set up a smart house and help overcome wearisome tasks. Automated security, heating and cooling, and lights are just a few modern technologies that simplify modern living.
For example, smart home hubs like Google Home and Amazon Alexa give homeowners the opportunity to control their electronic devices through a single app.
Think of the possibility of installing an automated smart lock inside the door of this two-story, three-bedroom Contemporary style home that can be accessed via a smartphone. (Plan #161-1106)
7. Millennials are aware of the impact of homes on overall energy consumption and therefore, want environmentally friendly homes. One thing that real estate agents and builders can focus on when negotiating with millennials is the ways to make the home more energy-efficient, and how to implement them.
8. The millennial mindset is on efficiency, convenience, durability, and minimal maintenance. Sellers should focus on switching carpeting to hard floors, synthetic or composite decking instead of a conventional wood deck, which requires more upkeep.
9. While millennials are technology-focused, their choices in architectural styles are far from cold and of the cookie-cutter type. They want old-World charm, character, and modern conveniences in their homes. These are some of the designs that are appealing to millennials.
Pre-World War II homes with brick, stucco, and stone exteriors – which would include Victorian, Queen Anne, Arts & Crafts bungalows, Craftsman, Tudor, Colonial, and California Mission styles.
Homes built between 1945 and 1965 such as Mid-Century, Prairie styles, and Eichler homes with flat roofs, courtyards, and open floor plans.
Then, there are the Mediterranean, Spanish and Italian styles with their stucco exteriors, terracotta tile roofs, wrought-iron accents, ceramic flooring, winding staircases, and patios.
With its rock and stone façade, gabled roof, and colorful front yard, this one-story Craftsman style home has all the exterior elements that are attractive to millennials. With 1,831 square feet of living space, the charming home includes a covered front porch, an open floor layout with a spacious Great room, raised ceilings, kitchen with a breakfast nook, and pantry. (Plan #109-1013)
Another Pre-War favorite of millennials is the Victorian style as in this gorgeous two-story plan that features three bedrooms and two bathrooms. The welcoming covered front porch with all the decorative details, the turret, and the gabled roof add to the charm of the home. (Plan #126-1248)
An affinity for the flat roofs, open floor concepts, and the connection between the interior and outdoor spaces of homes designed by Frank Lloyd Wright and Joseph Eichler, make the Prairie and Mid-Century styles top options for millennials. The Prairie style home depicted above is a one-story, 5,300 square-foot residence with an open floor plan, five bedrooms, four baths, a Great Room, large kitchen, den, recreation room, theater/media room, and a spacious shop under the garage. (Plan # 115-1206)
Millennials are also drawn to the Mediterranean style with its signature terracotta tiled roofs, stucco exteriors, arched doors, and windows. The amazing design above is a one-story home with a courtyard entry. covered front and rear porches, four bedrooms, powder room, four baths, and other remarkable features. (Plan #175-1251)
How Much Are Millennials Willing to Pay for Their Homes?
Given that most millennials lived at home to save up money to pay student loans and buy their first homes, it makes sense that they want affordable homes - with the majority opting for homes between $100,000-$200,000.
How Are Millennials Changing the Home Buying Process?
1. Millennials are tech-savvy – and use the internet and their mobile devices to do research, browse, and shop around for favorable mortgages. Through the internet, millennials arm themselves with information to make smarter purchasing decisions. As of 2016 - according to Forbes – “86% of home buyers ages 18 to 34 shopped around for a mortgage compared to 55% of the 55 and older crowd.”
2. Their preference for technology has changed both the way people shop for homes and mortgages and the job of the realtor. With information available at the click of a button, millennials are “forcing” the industry to adapt to keep up with them. But while millennials like to conduct their own research prior to beginning a project, they still recognize the importance of hiring a knowledgeable and trustworthy agent.
Millennials will rely on a realtor’s negotiation skills, valuable relationships, and ability to facilitate the home buying process.
3. Millennials prefer text-based communication, social media platforms, (Facebook,Instagram),and the internet to schedule appointments and ask questions about houses. The age of simple photos may be over as requests for video tours, online staging, and live streams are now common. They are more likely to watch a video of an agent giving a tour of a home than reading an article or looking at photos.
4. Beyond technology, this generation’s patience and preference for larger, updated homes have led to an increase in suburban movement.
Time will tell how long millennials will dominate the mortgage market. By streamlining the home buying process and demonstrating online savvy, this generation has already created a meaningful impact on the industry. As millennials settle into their new homes and communities, we wait for the next chapter.
Footnote: The lead image in this article is a Farmhouse style home with inviting front and rear porches. For details on the 1.5-story plan with 1,999 square feet of living space, three bedrooms, and an unfinished basement, check out Plan #106-1328