Millennials are the generation where they have substantial income inequality. The majority of millennials who currently own homes are wealthy, college-educated individuals who have been able to pay off their student loan debt or do not have any. However, millennials without a college degree have 19% less family wealth than their predecessors, and Black millennials have 52% less family wealth than their predecessors at the same age.
Those who can afford to purchase homes do so, while those who cannot continue to rent, which will exacerbate income disparity in the coming years.
Increasingly, investment firms are purchasing and renting out starter homes. This results in millennials purchasing more expensive first homes than their predecessors. Millennials, as a tech-savvy generation, have significantly altered the homebuying process over the past several decades.
• Millennials are beginning to purchase residential real estate, marking a generational shift in the housing market.
• Technology plays a significant role in the house-hunting process of millennials, as this generation uses mobile devices to conduct searches, view properties, and communicate with real estate agents.
• Because there are fewer starter homes available, millennials are purchasing nicer first homes than prior generations.
• During the COVID-19 pandemic, when home showings were conducted exclusively online, millennials were among the purchasers of real estate.
• As a group, Millennials prefer to reside close to their places of employment.
Technology-Based Home-Shopping
Millennials are devoted to their devices, and for this generation, technology plays a pivotal role in the homebuying process. According to the National Association of Realtors (NAR), 99 percent of millennials search online for general housing market and homebuying information.
Additionally, Millennials are roughly twice as likely as older baby boomers to conduct a search using their mobile devices. Over half of millennials (59%) said they would feel at least somewhat confident making an offer on a home they virtually toured, and 39% said they would feel at ease purchasing a home online. According to a 2021 report from Zillow, more than 80% of millennials would like to view 3D virtual tours and digital floor plans when shopping for a home.
Digital advancements have transformed real estate marketing, according to Coldwell Banker Warburg agent Steven Gottlieb. Today, it is commonplace to use virtual or traditional staging with professional photography to make homes stand out on online marketplaces among thousands of competing listings. Moreover, he stated that agents who do not stage their listings or hire a professional are doing sellers a disservice.
Note:
In 2021, 37% the proportion of homebuyers were millennials.
Communicating With Realtors
In terms of how they use technology to communicate with Realtors, Millennials differ from previous generations. Jill Hussar, a broker-owner at Hussar Real Estate in Lakewood Ranch, Florida, stated, "They prefer to communicate primarily through text messages."
According to Hussar, millennials use text messages to express interest in a property, schedule appointments, and ask questions, reserving phone calls for more urgent or pressing matters. Text messaging is the most immediate form of two-way communication.
Ninety percent of agents communicate via text message and ninety-four percent use email, according to NAR research. Another 34% chat with their clients through instant messages.
Another digital effect is how real estate agents list properties. Hussar stated that tech-savvy millennials are influencing real estate agents and brokers to replace traditional photographs with livestreaming and video. "Videos give the audience a broader and clear view of the property, communication, and their location," said Hussar, adding that they help real estate agents connect with potential buyers, particularly millennials.
Affordable Houses Close to Working Place
44% of those surveyed listed commuting costs as very important when considering where to live, 74% listed a convenient location in terms of their job as an important factor when choosing a neighbourhood, and 58% listed overall affordability as important. Millennials are the generation most finding the housing close to where they work.
Zillow, one of the big online real estate company, reports that 47% of millennial homeowners prefer to live in the suburb area as opposed to the city or the countryside.
Impact of Increasing Incomes
Millennials' reluctance to enter the housing market is partially reflected in their desire for more luxurious dwellings. They have waited longer for a home of their own, and now they desire a location where they can remain for an extended period of time. In 2018, college-educated millennials had median annual earnings of $56,000, roughly equivalent to college-educated Generation X employees in 2001. In addition, their median household income was $71,400 in 2018, compared to $70,700 in 2001 for Generation X households.
Gerard Splendore, a real estate broker at Coldwell Banker Warburg, stated, "Hardworking millennials earns handsome salaries which increasingly eager to self-validation by spending on luxury such as cars, vacations, and other material possessions." High-end appliances, landscaping, furnishings, finishes, and high-tech devices are required, according to him.
The 2022 Investopedia Financial Literacy Survey revealed that despite being the most confident generation in terms of financial literacy, millennials are also the most stressed. Those who surveyed are under substantial pressure to make their significant financial decisions, like homeownership, early in their lives. This anxiety has been exacerbated by rising costs, especially in healthcare, and financial disparities.
Which decades does the millennial generation encompass?
Generation millennials was born between 1981 and 1996.
Do Student Loans Prevent Generation Millennials from Purchasing Homes?
Yes, student loans prevent some millennials from purchasing a home. For mortgage approval, a lender will evaluate your debt-to-income ratio. If you have a high student loan balance and a high monthly payment, your ratio is higher and your chances of being approved for a mortgage are lower. Additionally, 51% of all student loan holders reported that their student loan debt prevented them from buying a home.
Are Millennials more likely to rent or to own a home?
Significantly more millennials are renters than homeowners. Furthermore, 18% of millennial renters intend to rent forever. This represents the highest rate of any generation.
Is the rate of homeownership among millennials comparable to that of previous generations?
No. At age 30, 42% of millennials are homeowners, compared to 48% of Generation Xers and 51% of baby boomers.
The Bottom Line
The Millennial generation has left an indelible mark on the housing market, and as the next generation of homebuyers enters the fray, additional changes are possible. Focusing on the positive effects created by millennials is essential for keeping this evolution in perspective. For instance, a focus on technology may result in a streamlined, more efficient homebuying process. Moreover, the migration of more millennials to the suburbs could mitigate the effects of rising housing prices in urban areas.
The desire for instant gratification among millennials in the housing market stems from their upbringing with social media. They appear not interested to undertake renovations, even before the current supply chain challenges. They rather like to move in immediately. This is widening the price, value, and market time gap between older properties and new construction, even if the older properties have great bones. Previous generations were more receptive to renovating older homes and seeing the potential in properties that were not staged and professionally photographed.
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