The millennial generation is one of the most unique age demographics when it comes to buying and selling a home. Unlike previous generations, many people in this generation do not feel like a home is a rite of passage to adulthood and others have student loan debt but a hefty down payment.
There are a record number of millennials that are still living at home with their parents, as a third of people between the ages of 18 and 34 are still living at home. This presents a huge market of opportunity for anyone that understands millennials and their buying power.
Houses vs. homes
In previous generations, a house was considered to be a person’s largest and most important asset, and it still is to this day. The common advice was to buy as much house as a person could afford, pay it off in 30 years, and enjoy the gains of appreciation. However, the housing crisis occurred while the millennial generation was still growing up, and they have seen firsthand what can happen to a person when their wealth is all tied up in their home. Due to these occurrences, many millennials that do buy homes view them more as an investment than an emotional purchase.
A larger percentage of this generation are renting out their purchased homes to others instead of simply buying to live in the home. There are many expenses that come along with owning a home, and the people in this generation seem to have figured out this fact from their experiences in the past.
Student loan debt
One factor that hurts the ability of this generation to buy a home is student loan debt. The average student is graduating with about $30,000 of student loan debt, and the job market has still not recovered from the recession. This means that many students are graduating with record levels of debt and are not able to pay it off because they have so much debt. This will weigh on the housing market for many years until the situation is resolved. At the end of the day, it is difficult to purchase a home with that much debt and a small income.
For those in the real estate industry, it is important to understand the trends in the market that are impacted by this millennial generation. There are many different trends that have the power to change real estate forever.
The millennial generation values customer service and ease of transactions in everything. It would not be surprising to see the complexity and cost of closing on a home go down as time goes on. Some of this is due to technology changes, and some is due to the customer demand that is going to come from the millennial generation. In addition, hopefully this generation learned from lessons of the past and can help to prevent a future real estate crisis before it happens.