“Millennials Are Super Charging The Housing Market”
This was a front page headline in the WSJ recently.
The millennial surge is something we have all seen coming – but there are some fascinating conclusions, nonetheless.
Millennials consist of the generation born from 1981 – 1996, and they surpassed baby boomers as the largest generation alive in 2019.
In 2021, millennials were responsible for 51% of all home purchases.
In contrast, Gen X (born from 1965 – 1980) had about 30% of all purchases; boomers (1946 – 1964) had 14%; and Gen Z (1997 and on) had 4%.
Millennials also accounted for 67% of first-time buyers and 37% of repeat buyers.
Six Conclusions
- Experts Wrong Again! For years, prior to about 2010, we heard again and again that “millennials… would become the generation that largely spurned homeownership” (to quote the WSJ). But that was obviously wrong, as millennials are now buying houses in droves, proving that all generations will likely want homes of their own once they hit homebuying age (30 and over).
- Demographics Drive Housing. This is a huge point that Barry Habib of MBS Highway fame has been making for years now. The median homebuying age is 33, and the largest bulge of millennials is just now turning 30 with a major and obvious impact on housing demand. In sharp contrast, as Mr. Habib points out often, the 2008 mortgage meltdown coincided almost exactly with a bottoming out of the peak homebuying age demographic. We saw boomers (born 1946 – 1964) drive housing similarly in the 1970s and 1980s.
- Millennial Surge Has Legs. As mentioned above, the bulk of the millennial generation is just now turning 30 while the “median” homebuying age is 33, indicating that strong millennial demand has not only not peaked, but it will likely continue for five to ten years longer.
- A Bit Less Loyal – Need Facetime and Maximum Value. “You can work with them every day and give them the world, and they will leave you in a heartbeat over a $395 processing fee.” That is a quote from a friend of mine who owns a large mortgage bank; he was complaining about how some of his millennial borrowers do not seem to feel the same sense of obligation or loyalty that his Gen X and boomer borrowers do. My guess is that this is a result of all of the communication that takes place over the internet, as millennials feel less obligated to someone with whom they have had little “facetime.” Hence, those of us catering to millennials need to both garner as much facetime as possible and/or make sure we offer maximum value from the get-go (or both).
- They’re Googling You. There are very few top producing agents alive today who do not have a pristine digital footprint or internet presence. This is because every millennial will google us (agents and lenders) and not even contact us – if they are not impressed by our internet presence (website, landing page, reviews, bio, etc.). This factor is growing more and more significant by the year too, so even our efforts from as recent as 2018 may be obsolete.
- Still Want Guidance – Agents Here to Stay! This is where experts were wrong again, as many expected millennials to be the first generation to circumvent real estate agents and to start buying online or via a more digital process. It turns out that millennials (like all people) still want in-person guidance when they are faced with the biggest purchase of their lives in a very competitive market. I don’t see this changing now and it also makes me realize that the traditional real estate model is likely here to stay, as I have mentioned in previous blogs.
Biggest Problem Millennials Face?
According to the WSJ article linked above, the biggest problem millennial buyers face is not finding a house but winning a bidding war. And to win, buyers of course need airtight pre-approvals, fast closes, strong offers with few contingencies, and smart agents who can figure out how much to bid without overbidding (no small task 😊).
Jay Voorhees
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 1197176, NMLS# 310167
