Every generation has unique characteristics – here’s how the millennials are changing the future of first time homebuying
June 10, 2015
Millennials are often ignored and overlooked in discussions on the state of the housing market, but the sheer size of the generation means that even their smaller movements impact society. Here are some of the ways millennials are changing home buying.
In the past, young adults acquired their first major loans with the purchase of a fancy car or a home. By contrast millennial enter into adulthood already burdened with student loan debt, as widely discussed in politics and the media. The reality is that student loans, due to their prevalence and degree, are restricting the financial positions of millennials and delaying steps typical to the age group such as marriage and starting a family.
Perhaps due to their limited financial states, millennials seem to be looking at different things when purchasing a home than generations in the past. Millennials are buying smaller homes and apartments located in urban areas seeking cost efficiency and energy efficiency, which directly translates to energy bill savings. Millennials like having space to entertain their friends, open floor plans and flexibility, and something a little different, perhaps a little unique. These rules apply even when buying in the suburbs. Millennials look for experiences, both to have and to share. They prefer walking distance neighborhood coffee shops and farmer’s markets to the typical chain restaurants.
Unlike boomers, millennials don’t expect to buy the house they’ll live in for the rest of their lives. They choose smaller apartments and homes, knowing that when they get married and have children they’ll likely have to move. Homeownership is increasingly looked at as an investment, causing urban home and apartment prices to shoot up, which make real estate an attractive investment for many.
Home Loan Applications
After the recent economic recession, millennials are wary of the big banks. They choose instead to work with dedicated full-service mortgage lenders and credit unions, both of whom offer a personalized level of service and care in their regions and neighborhoods.
The biggest sign of how homebuying may change in the long term comes from how millennials are using technology. According to a recent study by Google and the National Association of Realtors, 89% of first time homebuyers are using mobile platforms such as iPhones and iPads to research their first home.
Homebuying looks to become an increasingly digital and mobile process, with even traditional computers becoming less significant in the years to come. This doesn’t mean that realtors will be phased out or that people won’t visit open houses, but we should expect the steps in finding a home and obtaining a mortgage loan to streamline.
Technology has also changed how homebuyers, especially millennials, communicate. Gone are the days where real estate agents and loan officers left long, informative voicemails. Emails and text messages are now expected and preferred, though this doesn’t mean millennials don’t value face-to-face interactions. To this generation, information and quick communication are valued, even in the form of very short messages.
Technology has also made a wealth of information publicly available, allowing millennials to start the homebuying process better educated than the generations prior. Millennial first time homebuyers often know what they’re looking for and in which neighborhoods, and are able to do price and neighborhood comparisons from the comfort of their homes. As a result, the role of a real estate agent is changing. They are no longer there to educate and inform, but to interpret and to verify.
Young first time homebuyers are also less welcoming of any surprises and hidden fees once considered a part of life. They prefer transparency and use checklists, charts, and timelines, to comparing and verifying whether what they’re doing sounds right.