The Impact of Millenials on the Housing Market

The past few years have seen a rise in buyer demand for homes in the US. With historically low mortgage rates, many people were tempted to buy a house sooner than they may have otherwise. However, most people don't buy a home due to favorable market conditions alone.

Recent research has found that the median age of first-time buyers last year was 35 years old. The millennial generation is now between their late twenties and early forties – this is the largest generation group in the US at around 72 million people. Therefore, many Americans are entering the stage of life when they're likely to purchase their first home.

As demographics play a bigger role in the housing market than affordability conditions, spring buyers should be prepared for competition, especially in the more affordable price ranges that appeal to younger home shoppers. If you're looking to sell your home this year, it's worth noting that there will be plenty of interest from younger generations who are ready to take their next step on the property ladder.

Millennials as Homebuyers

Many Americans buy homes due to big life changes such as getting married or having children. Recent research suggests that millennials are now entering the stage of life where they're likely to purchase their first home.

Low interest rates facilitated millennials’ demand for homes. In fact, they accounted for the largest share of home buyers (37%) over the past year. Rising incomes will fuel continued housing demand—especially for inexpensive starter homes which nationally had a beginning price of $304,200 in Q2 2021.

Normalization of remote work should continue to drive millennial demand. An April 2021 YPulse study revealed that 55% of millennials want to work from home post-pandemic. Elevated student loan debt remains a burden for many millennials especially those of color. Despite this challenge though, demand from this important consumer group is likely to persist given the continuation of low-interest rates.

How Technology is Changing the Housing Market for Millenials

The influence of foreign buyers in residential real estate is growing, according to a new report from the National Association of Realtors®. For the period of April 2015 through March 2016, total international sales were $102.6 billion, up from $82.5 billion during the previous year and above the five-year average of $82.4 billion.

“Foreign buyer transactions have become more prevalent in recent years,” said Lawrence Yun, NAR chief economist. “Five consecutive years of at least a three percent share of sales to foreigners, and the past two years accounting for at least a four percent share, showcases the continued attraction that overseas buyers have in U.S. real estate.”

Yun also noted that although China maintained its top position in sales dollar volume for the fourth straight year, buyers from Canada and India also had a large presence. The impact of foreign buyers is particularly notable in certain markets such as Miami and San Francisco, where foreign buyers accounted for more than half of the sales.

What Millenials Are Looking For in a Home

Location

Millennials have become the driving force behind the US housing boom, and their preference for location is a key factor in their decision-making process. They place a high value on homeownership to secure their financial future and build wealth, and are looking for neighborhoods that are safe and conveniently located close to amenities like shopping, dining, and entertainment options.

Home prices have been rising faster than incomes, and as a result, many millennials are turning to more affordable locations. This is causing a shift away from some of the traditional hot spots in the US, providing an opportunity for buyers to find a good deal in some of the more affordable markets.

Remote work has also become more commonplace due to the pandemic, which has further fueled the demand for homes in more affordable, suburban locations.

Flexibility

Both millennials and baby boomers are aware that their needs and preferences may change over time, so they are looking for homes that have the flexibility and adaptability to accommodate those changes. This means that they are looking for homes that have open floor plans and can be easily modified to fit their lifestyle.

Energy-efficient, environmentally friendly homes equipped with the latest technology are also essential for both generations. Smart home features such as automated climate control, security systems, and lighting are becoming increasingly popular and are driving demand for homes in certain areas.

Affordability

The affordability of a home is a major factor for millennials, who often have limited budgets and a lot of student loan debt to pay off. Fortunately, mortgage rates are still very low, and many lenders are offering attractive loan products with low down payments and low interest rates.

In addition, many millennials are taking advantage of government programs such as the HomeReady or Home Possible programs, which allow them to purchase a home with as little as 3% down. These programs have made it easier for younger buyers to enter the market and have contributed to the rising demand for homes in more affordable price ranges.

Technology

Technology has become an essential part of the homebuying process, and millennials are particularly tech-savvy. They are using online resources to research homes, compare prices, and find the best deals. This has made it easier for them to find a home that fits their budget and lifestyle.

Real estate websites such as Zillow, Redfin, and Trulia are also popular among millennials, as they allow them to search for properties without ever leaving their homes. In addition, many real estate agents are using virtual reality technology to help buyers get a better feel for the home before they commit to a purchase.

Conclusion

Millennials are now the largest generation in the US and have become the driving force behind the US housing boom. Low interest rates have facilitated millennial demand for homes, and they now account for the largest share of home buyers. Rising incomes will fuel continued housing demand—especially for inexpensive starter homes. And normalization of remote work should continue to drive millennial demand.

Millennials are looking for homes that are in safe, convenient locations close to amenities. They are looking for homes that have the flexibility and adaptability to accommodate changing needs and preferences, as well as homes that are energy-efficient and equipped with the latest technology. Affordability is also a major factor, and many millennials are taking advantage of government programs to facilitate homeownership. In addition, they are using online resources to find the best deals.

The real estate industry is being shaped by the preferences and needs of millennials, and technology has become an essential part of the homebuying process. Foreign buyers are also having an impact on the market, with buyers from Mexico, India and Canada accounting for larger shares of the market. As more millennials enter the market, the housing market is likely to continue to be shaped by their needs and preferences.

If you're ready to sell your home, visit unrealestate.com/sell and learn more about our flat-fee listing packages and how we make selling your home simpler, faster, and more affordable than ever.

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