As of 2020, the largest group of potential home buyers fall in the Millennial category (age 24 to age 39). In fact, over 38% of all home buyers are millennials and over 50% of all mortgage originators are too.
As the first generation who grew up on the internet, what they’re looking for from both their real estate agent and home buying experience is often different from generations before them. These tech savvy buyers are looking for a seamless digital experience and a home with big potential. They’re more likely to purchase a fixer-upper and where they’re looking may surprise you.
Here’s what to keep in mind as the newest generation joins the market.
First Time Home Buyers
Most millennials are first time home buyers. According to the National Association of Realtors, almost 86% of younger millennials (age xx to xx) and 52% of older millennials (age xx to xx) fall into this category.
As with all first time buyers, they may be looking for more help and advice from their real estate agent. What type of credit score is needed to be approved for a loan? Which neighborhoods will suit them best? What are red flags to watch out for in-home buying process?
The good news is that millennials are more open than any other generations to learning how to do things themselves. They’ll happily join a digital workshop on a topic they’re interested in (Home Buying 101, How To Get a Mortgage, ect.) or sign up for a free hour consultation to learn about what town or neighborhood is best for them. Adding these to your offerings can get you in front of more potential clients. And as millennials share information more freely with each other, your potential client list can grow exponentially.
Waiting Longer to Buy
Another millennial homeownership trend is that they’re waiting longer to buy homes. Compared with a first-time home buyer in the 1970-1980s, millennials are buying their first home later and renting an average of 3.4 years longer. In 1981, the average first time home buyer was 29. The average age for a first-time home buyer increased to 33 in 2019.
One of the big reasons millennials are buying homes later is due to monetary differences from the baby boomer generation. Many millennials are burdened with tens of thousands of dollars in student debt—making it difficult to maintain a good debt to income ratio and to save up for a down payment. And if that wasn’t hard enough, they are also the slowest part of the population to recover from the financial crisis and recession that they experienced when they first joined the job market.
These challenges mean 59% of millennials have to make sacrifices to purchase a home. That’s compared to just 41% of the general population. Millennial clients are used to this type of compromise. Because of their financial position, millennials know they won’t be able to get everything on their wish list, especially for their first home. So, they may look to you with help in building a realistic must-have vs. want-to-have list for their budget. Offering realistic advice and support will help you grow your business with this demographic category.
Open to Fixer-Uppers in the Suburbs
Millennials buying homes are also more open to the suburbs and fixer-uppers than many think.
As a key concern of millennial home buyers is affordability – with 64% of millennial homebuyers listing it as a large factor when deciding which home to purchase – many are moving closer to family and friends outside cities. In fact, 25% of younger millennials now live in small towns and new buyers are more open than ever to moving to city suburbs to find an affordable home.
And it’s a good choice, as shrinking supply and skyrocketing prices, it’s getting harder for millennials to find move-in ready homes in their budget in major cities. To help with this issue, many millennials are turning away from turn-key homes to fixer-uppers. While baby boomers still spend more on renovations, millennials are increasing renovation spending year over year.
Looking for an edge? Having recommendations for everything from good contractors to good landscapers for clients to hire for their renovations will help you stand out from other agents, get more millennial referrals, and grow your connection with your community.
Researching More Agents
Where home buyers find their agents is changing too. 92% of millennials use a real estate agent and interview 2-4 more realtors than other age groups. As a generation used to researching everything online, millennials often don’t go with the first agent they come across. Instead, they use social media presence, online reviews, and even website info to choose a Realtor.
So, to attract millennial clients, it’s important to have a strong online presence. This means having active social media profiles on popular sites like Instagram, Twitter, and Facebook. Your content should position you as an honest and trustworthy expert that they can rely on to find them a home.
Another way to display trustworthiness is to ask every happy client to leave a short review on Google, Facebook, or other review sites. That way, potential clients will find dozens of glowing reviews when they look you up—increasing the likelihood they’ll choose you.
Lastly, it’s important to have an up to date and helpful website. Having pages with current listings, testimonials, and an “about me” section help to establish your credibility. Having helpful resources, like a guide to home buying or a blog with relevant articles, can also help you attract millennial clients. The more useful content you have, the more value you bring to millennials researching you online.
And reliance on digital doesn’t stop there. Millennials rely more heavily on technology throughout the home buying process than generations before them. 92% of millennials search for a home online, even before choosing a real estate agent. And, 77% of them find the home they eventually purchase online. Once they’ve found a real estate agent, 77% of younger millennials look to communicate with them by text, to ensure they can get information instantly, 24/7.
Millennials also like using new technology in the home buying process – like minute mortgages and virtual tours. Having a seamless digital experience from home searching to closing will help you differentiate yourself from other agents.
There are lots of digital technology options that will fit into your workflow. For example, chatbots can help you respond instantly to your millennial clients – even when you’re unavailable. Ribbon can also help. With an easy to use digital platform, Ribbon offers a seamless home buying experience with little extra effort or tech-savvy on your part.
Learn more today about how Ribbon can help you create a digital experience this new demographic will love.