The real estate industry hasn’t been particularly focused on millennials since they’ve come of age to purchase or rent. However, things might be about to change. Millennials are now the largest portion of the population, surpassing baby boomers, and are a large portion of both the rental and home buying markets. Whether you’re a landlord, home seller, or real estate agent, it’s time to look past the stereotypes and take account of what millennials really want.
Millennial Home Buyers
Clever Real Estate recently surveyed 1,000 Americans who indicated they intended to purchase a home in the next year, 51% of whom were millennials. Eight in ten millennials home buyers were buying for the first time. Contrary to popular opinion, 84% of millennials surveyed believed that homeownership was a core component of the American Dream and prioritized it over other life events, like getting married or having children.
Millennials are on their way to becoming the driving force in the real estate market, making up the largest share of home buyers (36%), according to the National Association of Realtors. Here’s the (multi) million dollar question: do millennials want the same things in a home as baby boomers?
Millennial Home Buyer Trends in Technology
As millennials search for their new homes, they overwhelmingly use online listing services, including sites like Zillow, Redfin, and Trulia (74%), but they still value working with real estate agents (by 74% to 60%). Buyers don’t pay real estate commissions, so real estate agents are still a part of the home buying process for millennials. It’s not surprising that millennial home buyers utilize technology at such a high rate, but a higher than expected amount combine that with traditional methods, like newspaper ads (18%), driving around neighborhoods (29%), and asking family and friends (34%).
The millennial generation is also 27% more likely to use their phones during a home search compared to older generations, who favor desktop computers and tablets.
What Do Millennial Home Buyers Prioritize?
Millennial home home buyers are very different than millennial renters. Contrary to what many might think, walkability to bars and restaurants (9%), commute time (11%), and proximity to family and friends (3%) rank as the least important factors for millennial home buyers. Instead, they value safe neighborhoods and good school districts. It seems like as this generational cohort gets older they start to resemble previous generations and are more interested in settling down and starting families than proximity to the city and amenities.
Millennial home buyers are more traditional than millennial renters: most are looking to settle down and start a family. Of course, not all millennials are purchasing homes. While millennial home buyers want more space (54%) and to save money over renting (43%), many are still renting due to necessity or choice.
With many members of Generation Y looking to buy, it’s more important than ever for potential landlords to adapt to their tenants’ needs.
The Challenges of Renting to Millennials
While Clever’s survey explored millennials on their way to homeownership, renters often have different needs and requirements. Though millennials are all considered part of the same generation, renters and buyers can be at very different stages in their lives regarding family, work, and stability, and therefore need different things.
Millennials aged 23 to 38 in 2019 are not only the largest home buying demographic, but also the largest renting segment. It’s up to property owners, brokers, and individual landlords to adapt and rebrand to their interests.
Millennials Expect More from a Rental
As the most educated generation in history, millennials have higher incomes than previous generations of renters. Although wage increases haven’t kept up with inflation, millennials may have more disposable income in some cities when renting. Gen Y renters take many things into consideration when choosing a property to live in:
Millennials are more likely to own pets than older generations, so property owners should consider making their property pet friendly. Of course, owners should vet larger (or noisier) dogs to make sure other tenants aren’t intimidated or annoyed.
Unlike millennial home buyers, millennial renters are looking for amenities like shops, restaurants, and public transportation. The old adage of “location, location, location” rings true for millennials. More affluent millennials will also be willing to pay a premium for modern appliances and fixtures. They’ll also be looking for spaces with an open floor plan that’s inviting and spacious. Lastly, consider expenses that can be bundled into rent like parking spots, cable, electricity and utilities. Tiered rent plans for millennials looking to bundle their expenses can be an amazing upsell opportunity.
While some of these concerns are location-specific, forward-thinking property investors and landlords can work to create policies and make renovations to appeal to millennials renters. Drawing in millennial renters and keeping them as tenants for a long time can be a successful investment strategy as this demographic continues to grow.
Developing a Relationship with Millennial Renters Using Technology
For millennials to stay in a rental, it’s key to develop trust as a landlord or property investor. Whether you manage a property yourself or utilize a management company, develop policies that keep multi-family occupancy high and your tenants happy. Technology is your friend. Just as millennials overwhelmingly use online services for buying a home, renters want to use the Internet not only to find their rental, but also for managing rental issues and paying their monthly rent.
Invest in an online portal for rental payments and maintenance issues. Not only will this make things easier for your tenants but also centralizes management for you. Online platforms that store maintenance issues keep your tenants happy by helping you address issues in a timely manner. By storing data about appliance updates, landlords can get ahead of issues before they occur, working proactively on maintenance rather than reactively to a busted water heater or leaking refrigerator. Millennials expect timely responses, and the right tools will help you manage your portfolio better.
Most importantly, work to build and maintain trust with the tenants. No software will make up for a lack of communication or misalignment of expectations with a tenant.
Millennial Home Buyers and Renters Driving Market Changes
As more millennials enter the home buying and rental markets, they’ll continue to influence the way real estate agents, property owners and investors, and landlords think about the market. While the demographic has different needs based on whether they’re renting or buying, they’re leading a massive shift in the way that the industry does business.
Technology is a major theme in the shift, with millennial home buyers and renters alike utilizing online tools to find their next home. However, human interaction is still required in the home selling and renting processes, with real estate agents and landlords playing a pivotal role in how millennials choose their next property.
Whether it’s millennial home buyers looking to settle down near quality schools in safe neighborhoods, or renters seeking out walkability to amenities, real estate professionals need to take heed of their dominance in both markets and cater to their needs. Those who don’t adapt to new technology and millennial desires are doomed to fail.