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5 Ways in Which Millennials are Changing the Real Estate Market
The real estate market is in a state of transformation, and at the forefront of this evolution are the millennials.
Born between the early 1980s and the late 1990s, millennials are a generation known for their unique preferences, values and lifestyle choices. As this age group enters its prime home-buying years, their impact on the real estate sector is undeniable.
However, many millennials are also experiencing income inequality because of student loans. It is reported that millennials without a college degree have 19% less family wealth than previous generations. That means that millennials who are able to clear their student loan debt can be able to buy their homes while those who are not able, are forced to continue renting. The impact of this in the future years is an increased inequality gap.
As of 2022, it was reported that 52% of millennials in the U.S. were homeowners. In this blog, we will explore the various ways in which millennials are driving significant changes within the real estate industry and influencing the future of homeownership.
If you're a millennial and are keen to work with an experienced real estate agent to help you find your dream home, then get in touch with Ila for all your real estate needs.
Key Takeaways
- Millennials are changing the dynamics in the real estate market due to their unique preferences, values and lifestyle choices
- Many millennials still continue to experience income inequality because of student loans that they have to clear
- Among the ways in which younger millennials are changing the dynamics in the housing market include online house hunting and texting as opposed to phone calls as a key way to communicate with their Realtor or real estate agents
Disclaimer
The contents of this article are for educational purposes only. They are not intended to be a source of professional financial advice. You will find experts on financial planning and financial management here. More on disclaimers here.
How Millennials are Changing the Dynamics in the Housing Market
Here are a few trends changing the face of real estate in the US:
1. Online house hunting
According to a report by the National Association of Realtors (NAR), 99% of millennials use the internet to do online searches in order to get general information about the housing market and home buying process.
Unlike previous generations, millennials have fully embraced the power of technology and are relying more on digital platforms to search for their dream homes. With extensive information online and access to real estate marketplaces and mobile apps, millennials have instant access to a large inventory of properties, comprehensive property information, high-quality photos and even virtual tours. Among this group of tech savvy home buyers, it is reported that more than 80% would like to view 3D virtual tours and digital floor plans during the process of looking for a home to buy.
The rise of online real estate marketplaces, such as Zillow and Redfin has also provided the millennial generation with easy access to an extensive inventory of homes and virtual tours. Instead of spending countless hours driving from one open house to another, millennials can now conveniently explore a vast range of options from the comfort of their own homes. They can view high-quality photos, immersive 3D virtual tours, and even experience augmented reality features that allow them to envision furniture placement and renovations.
2. Texting as a key way to communicate with Realtors and real estate agents
In addition to online house hunting, millennial buyers are transforming the real estate scene through their preference for texting on their mobile devices as a primary means of communication with their Realtor or real estate agent. This shift from traditional phone calls and emails to texting reflects the generation's reliance on instant and convenient modes of communication.
Unlike baby boomers, millennials find texting to be a more efficient way to engage with real estate professionals. That way, they can quickly exchange messages, ask questions and receive updates in real-time. Data from NAR indicates that the preferred mode of communication for 93% of Realtors with their clients is via text messaging. 90% prefer phone calls while 89% prefer communication via email.
Many Realtors and even real estate agents have embraced texting as a vital tool to engage with millennial clients. That way, they can easily share property listings, schedule viewings and provide updates on the home-buying process through quick text messages.
3. Digitization of the home buying process
With many millennials being tech-savvy and convenience being a priority for this age group, many potential homebuyers are leveraging digital tools and platforms to streamline and enhance every step of purchasing a home.
From online property search and virtual tours to electronic document signing and digital communication, millennials are reshaping the real estate market, making it more efficient, accessible and transparent. This digital transformation not only caters to their preferences but also benefits all parties involved, creating a more streamlined and inclusive real estate market.
As millennials continue to dominate the market, the demand for digitization will only grow stronger, prompting real estate professionals to adapt and embrace the digital landscape to cater to their needs effectively.
4. Walkability as a key consideration
Walkability has become a key factor that millennial homebuyers consider when looking for a place to either rent or buy a home. They seek neighborhoods where they can easily walk or bike to their daily destinations including workplaces, grocery stores, restaurants and entertainment venues.
The desire for a car-free lifestyle is driven by a combination of factors such as environmental consciousness, the convenience of avoiding traffic and parking issues and a desire to be more physically active. Millennials are increasingly drawn to vibrant urban areas, favoring walkability, easy access to amenities and shorter commutes. This shift has fueled the development of mixed-use communities and revitalization projects in city centers.
5. Low down payments solve savings issues
Today, many millennials face financial constraints and hefty student loan debts that make it difficult for them to save a substantial amount for a traditional down payment. Data from NAR indicates that younger millennials (23-31 yrs) have been able to put down a median of 8% of the purchase price toward homes, while older millennials are able to put down a median of 10%.
Recognizing this hurdle, mortgage lenders and government-backed programs have introduced innovative options such as low down payment programs. These programs enable millennials to enter the housing market with a smaller upfront cash requirement, often as low as 3% of the home's purchase price.
This shift has opened doors for many aspiring millennial home buyers who previously felt homeownership was out of reach. By reducing the barrier to entry, low down payments have increased accessibility and widened the pool of potential buyers. For homebuyers, it is important to note that if you pay a deposit of less than 20%, you will also need to pay for private mortgage insurance.
What Next for Millennial Home Buyers?
Millennial home buyers have already made a significant impact on the real estate market, and their influence is set to continue shaping the industry in the coming years. As this generation enters its prime home-buying years, their preferences for online house hunting, digital communication and streamlined processes will become even more pronounced.
Real estate professionals and industry stakeholders must adapt and embrace these changes to effectively cater to the needs and expectations of millennial home buyers. From incorporating advanced technology, such as virtual reality and artificial intelligence, to providing personalized online experiences and fostering transparent communication, the real estate market must evolve to meet the demands of this tech-savvy generation.
If you're looking to work with an experienced and tech savvy real estate agent for all your real estate needs, schedule an appointment with Ila here!
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