Article by Nat B. on Housely.com
Profile of the Millennial Home Buyer Is Not What You’d Think. Millennials tend to gravitate toward the city, spending excessive percentages of their paychecks on rent and student loan debt, right? Wrong. As it turns out, Generation Y comprises the largest percentage of the current home buying market at 42 percent. Half of buyers are under 36-years-old, revealing millennials are more enamored with the traditional path to financial prosperity than previously assumed.
Zillow Group’s Consumer Housing Trends report sheds light on numerous trends within the millennial home buyer demographic. Aside from taking up a surprisingly large portion of the real estate market, Generation Y buyers mimic their parents’ and grandparents’ aspirations of settling down in the suburbs. Like their predecessors, almost half of all millennial home buyers live in suburban communities. Meanwhile, only a quarter reside in urban cities and 80 percent of millennials under 25 live outside of the urban core.
Despite the technology available, most millennials defer to knowledgeable real estate agents to guide them through the arduous, albeit exciting, home search process. The majority of young buyers work with real estate agents and enlist professional help earlier in the search process than previous generations. Fifty-five percent go on to submit referrals to friends and family, while 26 percent leave online reviews to boost their agent’s credibility, revealing a strong sense of consumer loyalty. What’s more, 40 percent of millennials stay in touch with their agents for additional advice regarding home improvements – almost twice as often as Generation X and more often than baby boomers. Despite what you might think, millennials aren’t as text-happy when it comes to their real estate investments. Only one in 10 opts to text with their lender, showing only a small favor-ability of messaging real estate professionals compared to Generation X.
Less surprisingly, millennial home buyers tend to use the internet to jump start the shopping process. Nine out of 10 young buyers use the internet at some point during their home search, utilizing an average of at least three resources. Two-thirds use affordability tools such as mortgage calculators to determine their buying power. Given the wealth of information online, millennials reach out to at least two agents when buying and three when selling compared to older generations. The majority look toward reviews to narrow down their final picks, illustrating the importance of a strong online reputation within the real estate community.
In addition, the wave of millennial home buyers represents greater diversity. Just 66 percent of millennial home buyers are white compared to 77 percent of all home buyers. Seventeen percent are Latino or Hispanic, 10 percent are black and 7 percent are Asian or Pacific Islanders. These figures show greater proportions of minority buyers in the millennial generation compared to the entire home buying population.
These tendencies are shaping the way we perceive not just millennials but the home consumer base as a whole. Take a broader look at some of the average home buyer characteristics to get a better understanding of the current market.