Generational Housing Trends and their Impact on Real Estate
As time goes on, different generations have varying impacts on nearly every aspect of life. From fashion trends to home buying, keeping an eye on how generations make decisions can put you ahead of competition. For housing, millennial presence in the real estate market continues to become more prevalent. Read on to see how generational housing trends are shifting real estate and what you can do to more efficiently and effectively market to different groups.
Millennials vs. Baby Boomers
Generations are a tool: they give us the ability to look at Americans by their specific place in the life cycle, understand their view in relation to other individuals born at a similar time, and analyze how views of a certain generation evolve over time. The Federal Reserve Board defines millennials as those born between 1981 and 1996, making the oldest millennials 39 years old and the youngest millennials 24 years old in 2020. Baby boomers are those born between 1946 and 1964 following the post-World War II baby boom, making the oldest boomer 54 years old and the youngest 40 years old.
Marketing to Home Buyers
Decision to Purchase a Home
When asked what the primary reasons are for purchasing a home, generational housing trends showed different overall goals. Millennials stated that they have an overwhelming desire to own a home of their own or to upgrade to a home that is larger than the one they already have. Baby boomers, on the other hand, state that they often want to purchase a home to own their own, are preparing for retirement, are looking for more space, or have a desire to be closer to their friends, family, and relatives. Both generations stated that the primary reasons for the timing of their home purchase are often because it was the right time and they were ready to buy a home or they did not have a choice and needed to purchase the home when they did.
Home Search Process
Regardless of their generation, most people who are current home buyers will search online for properties first. More millennial real estate shoppers seem to be utilizing the internet to search for homes frequently. Baby boomers looking for housing frequently used the internet, however those who were using other forms to search for homes reported that they only occasionally use the internet. The longest search for home buyers falls into the baby boomer generation: on average it takes this group about twelve weeks to complete their online search while it usually takes other generations eight to ten weeks.
Effects of Internet Home Search on Buyers
Various actions are taken by different generations as a result of searching for housing. Millennials and baby boomers who search for a home on the internet often end up walking through a home they viewed online, seeing the exterior of the home and around the neighborhood, or select an agent to help them in the process.
Real Estate Professionals
Many people purchase their homes through agents. Buyers primarily want their agent’s help to find the right home to purchase, and then want additional help negotiating the terms of the sale and the price. Millennials searching for real estate also seem to find value in understanding the purchase process. The most popular way to select a real estate agent is through referrals, and then through self-evaluation, in which buyers can gauge an agent’s honesty and trustworthiness.
Generational Housing Characteristics
Type of Home
When analyzing trends in generational housing, it is important to look at property attributes of prior living arrangements. For millennials, this is often a time when they will move from renting an apartment or house to owning a house. Baby boomers, on the other hand, have owned a previous home before and are looking to buy a new one.
Millennials and baby boomers both gravitate toward purchasing previously owned homes, though baby boomers are slightly more interested in purchasing new homes than millennials. Buyers who are interested in new homes are looking to avoid renovations and problems that lie within plumbing or electricity. In addition, millennials and baby boomers are both overwhelmingly interested in purchasing detached single-family homes, as opposed to apartments and condos.
Location of Home
Millennial real estate seems to gravitate towards homes in a neighborhood or a subdivision in comparison to an urban area, small town, or rural area. Factors that are most influential for millennials when it comes to selecting a neighborhood include the quality of the neighborhood, the overall affordability of the neighborhood, the quality of the school district, and finally, its convenience to other points of interest such as their job, friends, and family.
Baby boomers housing seems to be slowly decreasing in suburbs and slowly increasing in both small towns and rural areas. Factors that contribute to baby boomers housing choices in terms of the neighborhood include the quality of the neighborhood, the overall affordability of the homes, its convenience to health facilities, and its convenience to their job, friends, and family.
As the real estate market continues to fluctuate through the future, don’t forget to pay attention to generational housing trends that have the power to disrupt the market. Look for trends in millennial real estate by paying attention to where they are buying a house and the type of house they are purchasing. Additionally, pay attention to baby boomer housing as they age and go through retirement, opening up space for the next generation to purchase houses.
