The millennial generation has long been a topic of discussion among those in the real estate industry. One reason: In the last five to eight years it's become apparent that this generation hasn't followed the traditional homebuying trends of preceding generations.
Millennials are renting longer and purchasing homes later in life; previous generations historically purchased homes much earlier. We're now beginning to see millennials transitioning through their "root setting" years, and as such we're beginning to see new trends among millennial buyers.
Unlike their predecessors, we're beginning to see a pattern in which millennials are foregoing the traditional routes of homebuying. They're choosing to purchase smaller homes, putting less money down, purchasing in areas that may require a commute to work and asking family for help to purchase a home.
As millennials tend toward minimalism, smaller homes fit that bill. Unlike previous generations, they aren't looking for sprawling square footage; rather, they prefer smaller homes that focus on quality over quantity. They're also tending toward eco-friendly and energy efficient properties with a smaller footprint.
Saving the traditional standard of 20% has been a challenge for this generation, due in part to student loan debt, increases in cost of living and a lack of savings. As a result, we're seeing more and more millennials putting a much smaller amount as a down payment and agreeing to take on private mortgage insurance in order to put less down. In taking this approach, it makes home ownership more attainable in a shorter amount of time.
Many millennials are learning of the expense of living in highly desirable/hip areas. As a local example, the median home price in Redmond is on average 25% less than in Bend. We're finding that this generation is willing to take on daily commutes and live in an area where there may be fewer immediate community amenities in order to attain home ownership and get what they want in a type of home.
Another emerging pattern is asking family for financial help. Many studies show that millennials are three times more likely to ask for help with their down payment from family members. And, many who do get the help are getting up to $10,000 in gifts from their families (primarily from parents and grandparents).
Many believe millennials will propel the housing market in 2020. We'll see more and more of this generation entering the housing market in the coming year and years to follow. It's important to consider this generation's impact and emerging buying trends, especially when considering a target market for selling a home.