Millennials: Yes, they eat avocado toast; yes, they love their phones; and yes, they’re shopping for homes.
Home buyers 37 years old and younger make up the largest portion of home buyers (36%) according to the National Association of Realtors. Millennials have experienced the 2008 housing crash and are overloaded with student debt, but they’re still hungry for homes.
A new study from Clever Real Estate surveyed 1000 U.S. home shoppers (and over 500 Millennials) to get to the bottom of what this generation really wants.
79% of Millennials are first-time home buyers, but they don’t want starter homes
Almost 80% of Millennials aged 18-34 are first-time home buyers. They’re unfamiliar with the home buying process, and 61% are working with a real estate agent to help them learn. However, 39% of Millennials aren’t using a real estate agent. These first-time home buyers need help, but they’re not tapping into agents whose fees are typically paid by the seller.
These buyers are inexperienced, but they are also tech-savvy, using online resources to do their own research. 75% of Millennial respondents are using online listing sites like Zillow and Redfin to research and find homes.
Millennials are thinking long term about their first home; most respondents prioritize neighborhood safety (38%) and a quality school district (35%) over walkability (11%) and short commutes (11%). Millennial renters might be looking for luxury amenities and locations near bars and restaurants, but Millennial home buyers very different.
Many respondents were looking for “more space” and “a forever home.”
In other words, the Millennials buying $8 chai tea lattes and looking for cute 500 square foot downtown apartments aren’t the ones buying real estate.
Millennials are looking for affordable homes they can fix up
Millennials between the ages of 25 and 34 have an average of $42,000 in debt, so they’re thinking realistically about their purchase. Over two-thirds of Millennial surveyed said they’d be willing to put in an offer on a fixer-upper that required major repairs, and more than half are looking for a home that’s less than $200,000.
However, Millennials that aren’t handy might be getting themselves in trouble. Homeowners spent an average of $6,649 on home improvements per household in 2018, and the average kitchen remodel costs $22,145. Millennials eager to buy homes need to be aware of the true cost of homeownership.
84% Millennials believe homeownership is part of the American Dream (and a great investment)
While many Generation Xers and Baby Boomers are looking to settle down in a quiet single-family home, 14% of Millennials are planning on buying multi-family homes that can generate income and help cover their mortgage. They’re 52% more likely than older generations to purchase a multi-family home.
Millennials understand real estate investing can be a viable path to financial freedom and help pay the bills along the way. 43% of Millennials believe buying a home is more affordable than renting, and another 43% believe real estate is a good investment.
In spite of the challenges Millennials face, an overwhelming majority believe homeownership is part of the American Dream. Their path might be rocky, expensive and filled with holes in their roof, but Millennials are still finding ways to break into the housing market.
About the Author: Tommy O’Shaughnessy is a Research Analyst at Clever Real Estate who conducts surveys, analyzes data and studies trends to understand the real estate market.