There's no denying that in the modern real estate market, millennials are the largest demographic of home buyers. According to the U.S Census Bureau Housing Vacancies and Homeownership report, in the last quarter of 2018, the homeownership rate among the 25-34 year olds was 36.5%. In the last quarter of 2019, it increased to 37.6%.
The median adjusted household income of the millennial buyer is $69,000. They are earning more than most young adults in the last 50 years. The increase in income might be one of the reasons why millennials are purchasing their homes as early as possible. This income, combined with their desire to start a family and build a home is driving the youngsters to occupy sub-urban real estate.
Let's take a dive on how millennials are changing the modern real estate market.
How Millennials Are Shaping The Modern Real Estate Market
1. Millennials Want a Digital Home Purchasing Experience.
Since millennials have grown up in a digital environment, many of them don't enjoy going to and touring homes in person. They'd rather browse through houses the same way they browse their other purchases - online.
According to the Real Estate in a Digital Age report, 58% of millennials found their current houses using their mobile devices. 99% of them start home browsing through the Internet.
Since the blossom of this trend, plenty of real estate brokers and realtors are now building digital platforms. This allows their buyers to look for their next property online.
More and more lenders are also starting to roll out digital mortgage platforms. This allows their consumers to apply for mortgages and manage them online. Insurers are also starting to join the digital world. Companies such as Lemonade are now using behavioural economics and artificial intelligence. This helps revolutionize how millenials are insuring their properties.
2. Millennials want to live in a sustainable home and community.
According to surveys, millennials are more environmentally conscious than previous generations. This is why it's not surprising to see that they're leading the revolution of green homes.
You'll find that solar panels are more popular in homes owned by millennials as well as homes that come with their own power management systems. This may end up increasing the insurance premiums since many insurance policies include solar panels.
In the future homeowners will have an excess of energy, which can be shared with their neighbours. This will help sustain the needs of the community while decreasing the impact on the grid. Appliances and features will not only be new but will also be more efficient. They'll only be using a minimum amount of energy which will potentially decrease the energy usage of a house by up to 50%.
According to experts, this will lead to having an electrical energy surplus within the next 10 years.
3. Millennials enjoy living in houses that come with new technology.
Millennials who are 27-36 years old are fans of smart houses. In fact, 36% have already purchased houses with smart home devices. 58% of them are interested in purchasing a house with smart technology.
Plenty of old neighbourhoods in great locations are being rebuilt to attract millennials. Most houses come with smart refrigerators, ovens, lights, water heaters, and locks that can be operated wirelessly.
Smart houses also come with specialized closets where you'll find the security systems, back-up power supplies and routers. They also have empty conduits that can be used to house transmission cables that will be installed later on.
Smart houses also have humidity indicators, water detectors, electrical monitoring, freeze detection indicators, and security systems. These features will serve as protection for the insurers and homeowners from any possible losses.
Insurers can take advantage of working with smart home technology companies. Their risks would be lowered, which in turn, would lower the premiums for homeowners.
4. Millennials are willing to wait until they're able to find the perfect home.
Surveys about searching and buying have found that millennials are willing to wait until they find the home they want. In fact, they're able to wait for more than a year. Their desire to find a modern home located in an area that fits their lifestyle makes them quite particular on where to invest their money. However, it's not surprising since most of them have lived with their parents or shared an apartment with a roommate for a couple of years. Plus, they may have stayed at a job they hate just to save up a downpayment.
A survey about buying preferences conducted by the National Association of Home Builders found that 41% of millennials prefer a brand-new house. They don't want to purchase a house that needs remodelling. A newly-built house will be given coverage by insurance companies. The study conducted by Insure.com has found that newly-constructed houses come with an insurance cost decreased by 35.5%.
A New Generation
The tastes, habits, and choices of millennials are changing the modern real estate market. However, the changes are not only fascinating to see but are also welcomed. Real estate companies, brokers, and agents should not only observe them, but also ride these trends as soon as possible. If they're not able to accommodate these changes, they'll surely miss out on the biggest emerging demographic in the industry.