Top 5 Motivators for Millennial Home Buyers
We get it - millennials like apps and want to text their real estate agent. Moving on... If you plan to help millennials buy their first home, you must understand their motivations and pain points.
Recently, I decided to buy my first home - a co-op apartment in Manhattan. As a marketer in the real estate industry, a millennial, a first-time buyer, and the daughter of a successful home flipper, there couldn't have been more reasons for me to document this experience. REALTrends took notice and decided to share my home buying story with the real estate community. So, for my agent and broker friends who want to understand why Millennials need real estate agents more than ever, please read my full buyer's journey here. It's an easy and rather amusing read!
Yet, the million dollar question still exists: WHY ARE MILLENNIALS' NEEDS DIFFERENT?
I don't think our needs are vastly different than previous generations of home buyers, but our motivations are. You'll piece together a few themes from my story, but overall, we're an odd bunch. We want to buy homes - we're interested - but, our financial footing isn't helping us. We're left wanting cool apartments in the city because it's truly our only option.
I believe there are 5 top motivators for Millennial buyers today:
1. We want money.
Money, money, money. Money makes the world go round and we want more of it. We know it doesn't buy happiness, but it can get us close. We watched our parents buy and sell solid real estate investments, so why can't we start dipping our toes? We can and we will!
2. Rent is out of control.
The average one-bedroom rent in Manhattan is $2,973. Yes, New Yorkers are insane for paying this, but we already knew that. The real issue is that the rift between our rent and our income is expanding to an unfeasible level, particularly for upwardly-mobile young professionals. Frankly, I'm tired of it - I want to start building equity.
3. Credit may tighten.
I was lucky and locked a great interest rate. However, my fellow Millennials may not be - purchase costs may be less palatable over the next year as access to credit tightens with higher interest rates. I'm no analyst, but we know rates can't stay this low forever.
4. Social proof.
A young person generally needs three things to buy a home: a pile of cash for the down payment, a mortgage and typically a buddy to do it with - perhaps a spouse. However, higher graduation rates (equal more debt!) delays marriage for many of my peers and it is more acceptable than ever before to find a single buyer, and particularly single female buyers. Being a single buyer represents, for me, social proof that young professionals can do this alone - you don't need someone else's money (well, maybe just the bank's).
5. Rite of passage.
My parents and grandparents bought homes for stability, security and status. They grew up in Philadelphia, where the row home was a symbol of success and family. Today, the size and shape of my tiny, 425-square-foot studio is is not as important as the financial independence that comes with owning a home. It's a rite of passage for me - I'm following in their footsteps. Same steps, different reasons.
Millennials may be skeptical and careful, but we're extremely influential. If today's real estate agents don't recognize why we are buying and how we plan to buy, they might as well forget working with us altogether. I believe that the American Dream of owning a home is very much alive, but us Millennials are just fashionably late!