It’s official: Millennials have taken over the housing market. Despite previous trends implying that millennials are uninterested in owning homes, people born between 1981 and 1997 will account for more than half of all mortgages in 2020 according to a Realtor.com study. Rising rent prices and the luring investment potential of homeownership has translated into increased demand for affordably priced homes. With almost 5 million Americans turning 30 this year, the demand won’t be slowing anytime soon.
The home buying process and expectations of a first home are quite different for millennials than for Gen X and Baby Boomers. For starters, it takes considerably longer to purchase a home. In the past, the whole process took about three months from start to finish, and now it’s averaging five months. One reason is that buyers spend more time researching and self-educating before purchasing. Online tools such as blogs and social media allow homebuyers to be more hands on, but it can draw out the process. Also, the heightened competition given short supply of homes often leads to bidding wars and losing out on several offers before finding and purchasing a home.
So, what are millennials looking for when they purchase a home?
For many first-time buyers of this generation, a starter home won’t cut it. Millennial buyers tend to be apprehensive about renovations that are costly and timely. Most desire move-in ready homes as opposed to the not-so-romantic fixer-upper concept, and many plan to stay put for a while. They want amenities, space, good school districts, and kitchens for entertaining.
Millennial buyers realize that buying a home is a good investment and a step toward financial stability. They want a home that will maximize their investment, so when searching for a home, most buyers want to make sure they can get their money back—plus some—if they need to sell.
One priority that hasn’t changed across demographics when purchasing a home is location. Many millennials are seeking the “suburban downtown,” or an area that offers many amenities found in urban living such as walk-ability and mixed-use development, but in more suburban areas and at a more affordable price point.
While the millennial generation has put off buying their first homes, clearly, they haven’t disavowed homeownership. They are still drawn to purchase a home for many of the same reasons as before; owning a home is a good investment, a way to put down roots, be part of a community, and a signal of success.
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Written by Aislinn Teachout