From Patty Loveless to Mariah Carey, the music has changed but the message remains: “Nothing ever stays the same.” This is categorically true as it applies to the tastes, wants and desires of homebuyers – especially the category labeled “Millennials or Gen-Y.”
Representing a growing segment of the home-buying public, Millennials are living in a world dramatically different than the one their parents experienced: the up and coming generation’s world view has been shaped by the events surrounding 911, the Economic Meltdown in latter half of the first decade of the new Millennia and the growing influence of technology on daily life.
No wonder Millennial’s preferences are significantly different than those of previous generations.
Just a few short years ago, this age bracket was comfortable living at home with the parents with no move-out date in sight. Jaded by world and economic events, they were in no hurry to embrace the responsibilities of home ownership. Debt has also been a huge obstacle, with high student loan and credit card balances. This is now changing, and Generation Y (sometimes also called Generation Next) is “in” the market and, in some areas, constituting the highest market segment. While some “traditional” preferences have carried over from previous generations, Millennials have given them a new twist, making them significantly different than the home-buying populace of just 20 short years ago.
Here are the top 10 things younger buyers want:
1. Good Neighborhoods
No longer desiring homes on quiet cul-de-sacs buried deep in suburbia like the ones they grew up in, today’s younger buyers want homes in the middle of “What’s Happening Now.” They define “good” neighborhoods as those with great walk scores, easy access to eclectic community features and shops, upscale restaurants, bars, clubs, coffee shops and abundant commute options. Proximity to rapid transit is a huge plus. Ironically, as children begin to appear, values begin shifting back towards more traditional residential neighborhoods, but still must have good commute access.
2. High Quality Schools
Although some cultures already place a very high emphasis on top-rated schools, many millennials are looking for good schools for other reasons as well. With more demanding work schedules meaning less time available to work with children and their homework, many want schools to pick up the burden. The perception is that the higher scoring a school might be, the higher the probability its students will be more successful. Consequently, many buyers are willing to settle for much less house to gain access to higher-ranked schools.
3. Affordable Monthly Payments
Given that current mortgage rates are so low, substantial numbers of today’s young professionals can easily afford large mortgages. However, a significant number are borrowing less than their cap to ensure they do not get over extended in the event of a personal crisis or economic downturn. This means that significant numbers of buyers are no longer looking for the largest house they can afford – McMansions are NOT on their radar – they are satisfied with a home that fits them AND has a mortgage that’s pleasing to their wallets. Consequently, they are quite happy with smaller homes and also want them as energy efficient as possible to keep monthly utility bills to a minimum.
4. Open Spaces
Older homes are known for being compartmentalized and also feature smaller rooms. They also frequently have small closets and limited storage areas. Younger buyers have fallen in love with the idea of open, soaring spaces and therefore appreciate properties with fewer walls, higher ceilings and larger rooms. They don’t perceive that they need a living room and a separate family room or even a dedicated dining room; instead, they’d love to have a Great Room that combines kitchen, living and dining areas into one open space. The larger the kitchen the better – they like interactive entertaining focused around gathering in the food prep spaces – the more they can fit, the merrier. Good-sized bedrooms are also a plus, especially the master bedroom. Given the choice, a loft-styled home would be appealing to many. Lastly, the home has to have adequate storage for larger wardrobes and personal belongings.
5. Move-in Ready
Most Millennials don’t want to fix up properties after they buy. They have neither the time, energy or requisite skills to remodel their new digs – this generation does not know its way around a tool box. Far more adept at setting up home WIFI networks, they have no idea how to begin or manage a bathroom renovation. Therefore, the more “turnkey” a home appears to be, the better. Remodeled and upscale kitchens and baths are high on their list of “must-haves.” Since they are watching HGTV and similar shows in increasing numbers, they love professionally staged properties because they help them visualize how they can turn any given property into a home.
6. Technology / Media Friendly
The #1 question overheard when showing homes to Gen-Y is, “Where will the TV go?” In reality, many homes were simply not designed with today’s large screens in mind. Buyers are looking for spaces that will be adaptable to media centers with surround sound, ample room for large screens and more. The property they choose must also be adaptable to other electronic needs, including home security, heating and lighting systems managed by their portable devices. Since many never plan to have a traditional landline, cell coverage and internet accessibility are critical.
7. Home Office
According to Bankrate.com, more than 13 million Americans work from home. If anything, this number is going to continue to rise, making a dedicated space for a home office a “must-have” for many Millennials. Since many use interactive communications technology such as web conferencing or Skype, a dedicated space they can isolate is critical. The kitchen table is no longer a viable option, so an extra bedroom, loft or den is usually the room of choice.
8. Low Maintenance
Anything perceived as “hard to clean” or “hard to maintain” is a huge turnoff for this age segment. They balk at the idea of cleaning grout on tile counters, preferring low maintenance solid surfaces such as granite or engineered stone. Wood or laminate floors take precedence over wall-to-wall carpeting. They also like the idea of an HOA caring for the exterior: weekend time is so valuable, they don’t want to spend it cleaning gutters, maintaining landscaping or the like. They are willing to pay HOA fees (as long as they are not too high) to obtain the extra freedom, as long as there are no impending assessments on the books.
9. Potential Appreciation
We’re frequently asked, “Will the resale value be good for this home?” It’s a great question, yet difficult to answer. Prior to the meltdown, many were buying homes for the short-term and banking on quick appreciation. Since all segments of the market were spiking upwards, the selection of any given type of home and specific location was not as critical as it has recently become. In this post-collapse era, Millennials are telling us they plan to stay in their new acquisition between 10-15 years. This means potential long-term appreciation is more critical than ever and harder to access. Potential neighborhood stability and projected school scores factor significantly, and buyers should research desired neighborhoods carefully. Additionally, single family homes have traditionally held their value better than condos or townhouses.
10. Energy Efficiency
While not a large determining factor as of yet, it is projected that energy efficiency WILL be a very real issue going forward. Millennials, while very cogent of the idea of “Going Green,” are not fully onboard if it’s going to add a hefty price tag to any given home. However, California’s current water woes along with the growing number of affordable energy efficiency options are starting to bring these issues to the fore. The rapid advances in LED lighting technology and subsequent cost reductions in just the past few years are one example of how Green Technology and energy efficiency will become a hot commodity in the near future.
For sellers looking to market to Millennials, here are 3 key things to remember:
1. Home Condition Matters
Since younger buyers are looking for turnkey homes, properties that have been renovated will reap the highest rewards for sellers. In the current hot market, we’re seeing returns well over 100% for any dollars invested in upgrading the home. This includes new windows, renovated kitchens and baths, hardwood or laminate flooring throughout, contemporary color schemes and more. Since buyers have no idea how much any given upgrade will cost, they tend to overestimate any potential work, then subtract that from the asking price. As an example, if $5,000 could pay to install new windows on an existing home, a seller might expect to gain a minimum of $7,000 from their investment, in some cases, much more. If they leave the windows as-is, a buyer, not knowing actual window replacement costs, will more likely deduct between $10-15,000 from a potential offer price. The same applies to other areas as well.
2. Staging Is Critical
Long before they begin shopping for new digs, most buyers have already been out looking at home furnishings. They all have their favorite stores, whether it’s Pottery Barn, Restoration Hardware or something similar – they all know what styles they like. Stagers know this and try to tailor a home to the tastes of those they expect to come through the front door. When prospective buyers show up and the home looks and feels like the ones they love in the magazines or showrooms, it provides an immediate emotional connection to the home.
Further, a high percentage of buyers simply cannot visualize their belongings in an empty room – and they don’t go shopping for homes with furniture measurements in their wallets. The only effective way for them to gauge any given room is for it to be staged. New home builders realize this and spend a lot of money decorating their model homes – it should be no different for sellers of resale properties.
The most important reason for staging, however, is to provide a foundation for pictures that sizzle. Since buyers look online long before visiting actual properties, the homes that most look like their dreams in the online photos will be the ones they tag as favorites and then visit in person.
3. Online Marketing MUST Be Top Shelf
Starting with professional staging, the next step is to provide professionally taken pictures. Insist that your listing agent provide a professional photographer: iPhone pictures just don’t cut it and most agents simply do not have the skills or equipment to take magazine quality shots. Some brokerages, conscious of the importance of online marketing, are actually beginning to provide 3D virtual tours – a buyer can start or stop at any point in any room of the house and virtually “walk through” the home online. Millennials love this type of technology and homes that are fully prepared and utilize this type of technology are getting bumped to the front of the list.
It’s a new Millennia and with it, a whole new generation of buyers. Millennials have very specific preferences, and sellers hoping to cash in with the younger buyers will want to pay attention to what they want …
And work hard to target their specific tastes.