Millennials are buying houses – and these are their preferred cities!
Demographics is a great indicator when it comes to selling houses. It’s not the same to sell a property to baby boomers, gen X, millennials, or even (somewhere down the road) centennials. Each of these groups will be on the lookout for different properties with varying characteristics and in diverse places. Even the selling tactic shouldn’t be the same. Therefore, as an investor, it’s crucial to know their preferences, so you can choose better homes for rent or flip and highlight the benefits according to the client.
Today, we will focus on one of these groups, which according to the mortgage company LendingTree makes up the largest group of homebuyers in the United States. We’re talking about millennials or people who were born roughly between 1980 and 1996/2000. The real estate research firm Zonda analyzed what happened with them during the Covid-19 pandemic (the report goes from November 2020 to April 2021 and surveyed about 1,000 millennials across the U.S.).
To start with, they saw that the distribution of millennials is most concentrated at 30 and 31 years old, something to take into account since that’s also the age at which people in the U.S. tend to get married and, subsequently, buy a house. However, in order to do that, it’s essential to have money, and that’s not the case for everyone. In fact, the main three reasons to keep renting a home are related to affordability: inability to afford a place of their own, no down payment, and student loan debt.
Nonetheless, the pandemic had some positive impact on their finances, and that opens opportunities. For instance, 42% of the surveyed said that their income increased compared with last year, and 60% said they saved more money in 2020 compared to 2019. In addition, they reported that their top priority was to keep saving as much money as possible, followed by using their saving for a down payment on a home. And that’s great news for you!
Though the housing shortage is making things difficult for new homeowners, 17% of millennials plan to buy a home over the next one to three years (a percentage that, extrapolated to the total amount of millennial population, means nearly 16 million people). Moreover, 7% of them are trying to buy as soon as possible, but the low inventory limits them. However, despite these numbers, it’s important to keep in mind that 15% of those surveyed indicated that their savings aren’t enough to buy a home yet.
The 10 most popular (and not-so-much) places for millennial homebuyers
Wouldn’t it be great to know where 17% of millennials who want to buy a home will look in the next 1-3 years? Your wish is our command! Another report, published by LendingTree, ranked the ten most popular (and unpopular) locations for millennial homebuyers. They analyzed mortgage purchase requests made on their platform across the nation’s 50 largest metros from January 1 through December 15, 2020.
They found that this age group makes up most potential homebuyers in most of the country’s largest metros. Furthermore, “We found the top cities were attractive to those older millennials with high-paying jobs in the tech industry,” observed LendingTree’s Chief Economist and Vice President Tendayi Kapfidze when asked by Forbes.
These are the ten most popular places for millennial homebuyers:
- San Jose, CA
- Boston, MA
- Denver, CO
- Minneapolis, MN
- Buffalo, NY
- San Francisco, CA
- Salt Lake City, UT
- Austin, TX
- Pittsburgh, PA
- New York, NY
The best advice we can give you regarding this is to be prepared in advance for potential clients. And that not only means having your business strategy determined but also having the best proptech tools already in place, so when they show up, you already have a pipeline of deals coming to you daily. For instance, it’d be great to be familiar with off market properties since they provide you with bigger discounts, which means more profit!
Gladly for you, we have the best software in the market to help you with, and we’re present in some of the most attractive places to millennials! Check out our Premium Off Market Leads (available in Texas and Utah). They’ll both get you off market leads on a daily basis with the skip tracing already included! If you like, you can ask for a free one-on-one consultation here (no strings attached!).
On the other hand, these are the ten less popular places for millennial homebuyers.
- Las Vegas, NV
- Tampa, FL
- Phoenix, AZ
- Miami, FL
- Jacksonville, FL
- Orlando, FL
- Virginia Beach, VA
- Memphis, TN
- Riverside, CA
- New Orleans, LA
If you operate in some of these places, don’t worry! The fact that millennials don’t prefer them doesn’t mean other age groups don’t like them. The key is to know who your potential clients are and find appealing opportunities for them.
What millennials are looking for when buying a home
We established that they’re buying and also where they want to settle down. The last thing to know is what they’re looking for when searching for a property. According to Zonda’s report, these are the top five reasons to purchase:
- Customization: they aspire to make somewhere their own.
- Put down roots: also, they want to settle down and have more stability.
- Housing as an investment: some of them are interested in this particular aspect of buying a property.
- Math: they also realize buying can be cheaper than paying rent.
- Pay to yourself: lastly, they seem to be tired of paying rent.
Another piece of information that’s worth mentioning is the thing that matters most to them. And that, for both owners and renters, is the kitchen, followed by a garage and a functional backyard.
To sum up, millennials are an age group to keep an eye on for the foreseeable future. They are willing to buy, and some have the money to do so, especially those working for the technology industry. Additionally, they have their own expectations and aspirations, and you need to use this when approaching them, so they feel understood.
The Covid-19 crisis allowed them to save up some more money and work from home (almost half of the surveyed by Zonda have been doing home office for the past year). This situation implies that at least a part of them will continue to do so after the pandemic and that they’ll be searching, for example, for more affordable housing, a bigger yard, and a separated space that works as an office. Now that you know this, it’s time to get ready to catch them!
Disclaimer: The blog articles are intended for educational and informational purposes only. Nothing in the content is designed to be legal or financial advice.