According to the U.S. Census Bureau, millennials now number some 83 million – more than one quarter of the nation’s population. As the largest demographic group in America, millennials are a powerful buying force in residential real estate.
They are the largest source of demand in the American homebuying market for the fourth consecutive year, according to the National Association of Realtors. Therefore, their preferences will greatly impact the economy and shape the rebounding real estate market for years to come, including how homes are built and financed.
With interest rates still low, many millennials are ready to make the jump into home ownership. The big issue is that housing inventory is at historic lows across the country, causing competition to tighten. These factors have caused many in the industry to adapt the way they do business with millennials.
Millennials are better informed about their options than probably any other generation before them, and they know exactly what they want for their future home. They conduct hours of online research just to buy simple household items, so naturally they’re going to do even more research when it comes to buying a home. Getting the information in front of them is key, and making sure to highlight relevant features is crucial.
When it comes to buying a new home, most millennials are first-time buyers and want a property that is within their budget, fully updated and move-in ready. For many millennials, their idea of a perfect home is to be affordable and modern at the same time. They desire homes with the latest technologies – such as smart appliances with built-in Wi-Fi and easily controllable heating and cooling with one swipe of the finger. It’s no wonder many home sellers now are making all the necessary repairs and improvements before listing.
This means new or updated homes are the ones that are going to be moving the quickest. It might seem a little excessive, but if you aren’t willing to cater to this generation’s enormous buying potential, you’re probably going to be missing out on potential home sales.
Real estate agents are still needed during the homebuying process, but they have seen their roles change in recent years. Millennials do the research on their own but still need someone to facilitate the sale. The agent has become their one-stop shop when it comes to negotiating the contracts, doing the paperwork and helping them find a mortgage loan officer to secure financing.
Working with real estate agents is a new venture for many millennials and nearly half of millennials find their real estate agent through a friend, neighbor or relative.
This means agents need to work hard to ensure solid referrals from clients by being honest and trustworthy. Millennials are often willing to stick with an agent they trust, even if there are more affordable options.
The biggest real estate challenge for many millennials is they don’t have the proper amount of savings for a down payment due to stagnating wages in a competitive job market and a sharp increase in student loan debt. They’ll often turn to unconventional financing.
One method is to borrow from their parents for a down payment. There is nothing wrong with this, but it does add another layer to the real estate deal that is not often found in other generations.
Another unconventional method is securing a zero-down, 100 percent financing home loan sponsored by the U.S. Department of Agriculture to promote homeownership in less-dense communities. Prospective homebuyers may be surprised to see how close these qualifying locations are to suburban areas. There are several properties in the Springfield area that qualify for this type of loan.
Every generation has its unique character traits that change the world around them. This forces markets to keep up with those ever-changing tastes. Millennials are the current trendsetters, even in big real estate purchases.
They are a smart and tech-savvy generation, which means homeowners and agents must adapt. If not, we’ll get left behind.
Kelsey Grubaugh is a mortgage loan officer for Arvest Bank in Springfield. She can be contacted at email@example.com.
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