There are about 79 million millennials in the U.S., and their purchasing power is estimated to be $170 billion per year. This powerful demographic, born from the early 1980s to the early 2000s, now represents the largest group of homebuyers at 32 percent, taking over from Generation X.
But when it comes to millennial homebuyer behavior, it can be difficult to distinguish fact vs. fiction. We looked at information from a recent Pardee Homes and BUILDER survey, information from realtor.com, and the National Association of Realtors to cut through the noise.
We know that millennial homebuying behavior is different than older generations, like texting vs. calling when contacting their Realtors and extensive use of real estate apps to do their research (be sure to check out our blog post, 6 Ways Millennials Are Changing Real Estate Business for Everyone, to get the full breakdown.)
But what are the specific preferences of this new breed of homebuyer? Read on for 5 unexpected facts about millennial homebuyers and what they want in their home.
1. They’re more suburban than we thought
A lot of the recent news about millennial homebuyers paints them as urban dwellers, and maybe as renters they are. But when they are looking to buy their first home, more than half of the survey respondents said they want a suburban lifestyle. (Candy wrote about this very fact here!) Even more surprising, they’re four times more likely to pick a bigger house over living in a more populated community.
But even though these millennials said they want a suburban lifestyle, they want urban amenities, like the ability to walk to parks, grocery stores, schools, and work.
2. Millennials crave outdoor space
A lot of the traditional reasons to buy a house ranked high with millennials, like financial investment. But the “desire to have outdoor space” was the most important reason they want to purchase a home.
3. They want flexible living spaces
When millennials look at houses, 71 percent rank the ability to customize a new home as somewhat or very important. Top personalizations? A children’s play space is important or must have to almost four out of five respondents, and 74 percent said the same thing when they were asked about having a separate living suite (think aging parents). Other uses of the space that ranked included finished basements and office areas.
4. They’re considering their homes as an income source
According to The Project on Student Debt, in 2013, seven in 10 (69 percent) of graduating seniors at public and private nonprofit colleges had student loans averaging $28,400.Compare that with the average debt of approximately $15,000 (adjusted for inflation) for Gen X’s 1993 graduates. Ouch.
Not surprisingly, there is a growing interest among millennials to use their new homes as a source of income. About 35 percent of those surveyed agreed that they would likely rent out a space in their home to generate income.
5. Millennials plan to customize
Part of seeing their home as an investment means spending about a fifth of their budgets on renovations and customizations to up its value. This could be important information for Realtors to know when working with them.