It’s no secret that millennials, born 1980-2000, are the largest generational population in history (92M), surpassing Baby Boomers by 15M. Their sheer volume creates massive buying power for this group, who are poised to reshape the economy.
But this segment’s circumstances are quite different than prior groups. Unlike other generations, 1 in 3 millennials live with their parents, and of those, 1 in 4 does not work or go to school. For many, the decision to live with their folks is determined by the heavy student loan burden they face. In fact, 41% of young families still carry a student loan, up from 17% in 1989, while the amount of these loans has tripled during this same period. This financial weight has caused delays in life’s important milestones like home buying, marriage, and starting a family.
But as millennials crawl out from under their loan burdens, moving out of Mom and Dad’s house or rental property to buy a home is at the top of their priority list.
Millennials make up the largest group of homebuyers, representing 45% of purchase loans. They are the most educated generation in history and conduct more research than prior generations to insure they get what they want and where they want it.
If millennials are anything, they are determined, thorough, goal oriented, decisive, and trusting. They are well connected and seek input and information from friends and strangers alike to determine which builders have the best reputations, deliver as expected, and at the most affordable price. Builders with a history of delivering customer satisfaction through positive word-of-mouth recommendations, website reviews, and beautiful website gallery content, like those in our CBUSA network, tend to be more highly considered than those who have medicore reviews and poor website content.
Millennials are quite comfortable with sharing products and services, as we’ve seen with the success of companies like Uber, Lyft, Airbnb, and Kickstarter. In fact, renting rooms to weekend travelers and long term renters to help pay the mortgage has become a winning strategy for many young buyers.
Nearly half of all millennials prefer to buy a brand new home, avoiding the fixing and repairing of things in older homes. They drive the demand for new home technology needs that prior generations did not consider or have available to them, including energy efficient products and alternative energy options like solar. They expect their homes to have strong internet and cell connections for their digital lifestyle. Fortunately, builders and manufacturers are in lock step, providing quality options to meet their specific needs.
Importantly, the number of young women ages 25 to 34 in the workforce jumped more than 40% between 1975 and 2016, while the number of young female “homemakers” dropped from 43% to 14%. Millennial women’s spending power is much more impactful than prior generations. These women are making big ticket buying decisions with or without a partner’s input or financial support. Successful builders have responded to this trend by adjusting messaging, home options, and design partners to accommodate this vital and influential segment.
The millennial generation will continue to influence and impact our economy for years to come. Understanding their needs, preferences, and trends is imperative to builders’ success.
Check out our sources and learn more about how millennials are impacting the new home industry here:
Here are a few links for more information:
http://www.goldmansachs.com/our-thinking/pages/millennials/
http://money.cnn.com/2017/04/03/real_estate/millennial-homebuying/index.html
https://www.inc.com/john-white/how-millennials-are-changing-the-housing-market.html
https://www.census.gov/content/dam/Census/library/publications/2017/demo/p20-579.pdf