As millennials have come of age, they've been hailed as a generation of renters – largely due to the fact that home prices have outpaced wage growth in much of the country.
But as the cost of living slows to better meet job and wage growth, younger Americans are entering the housing market at a greater pace.
In 2016, nearly half of homebuyers were first-time buyers, made up primarily of millennials – those age 18 to 35 – according to real estate information company Zillow.
Zillow predicts the share of millennial homebuyers will continue to grow in 2017, driving up the overall U.S. homeownership rate. The U.S. Census Bureau reports homeownership was 63.5 percent in the third quarter of 2016, a slight uptick from the second quarter, which at 62.9 percent was a 51-year low.
And with a new majority buyer demographic, the real estate industry is working to meet the needs and expectations of a generation for whom using technology is natural, relationships are key and innovation is necessary to bring the field on par with other industries that have had a significant base of millennial consumers for many years.
David Walker, CEO of TripleMint, a full-service real estate brokerage, says he expects millennials entering the market to begin making an impact on how the industry operates in the immediate future.
“There’s going to be a huge swing where that’s going to change as millennials enter the housing market and sort of demand a higher level of services and platforms and a different type of brand that has been successful in the past [in other industries],” Walker says.
Here are four things millennials may encounter when searching for their next home.
More amenities. Added perks are not just for apartment buildings, as condominium associations, planned communities and even existing neighborhoods are striving to attract the millennial generation as it comes of age with features and services to make living more convenient and enjoyable. Individually owned communities can learn from rental communities that have found their niche market and cater to millennial residents' needs.
One example in the District of Columbia is a newly redeveloped apartment building by Varsity Investment Group that's embracing its neighborhood’s high concentration of students and recent college graduates from George Washington University.
Varsity on K, which opens to residents of the Foggy Bottom neighborhood on Feb. 1, was designed by architect Fernando Bonilla-Verdesoto, founder of Soto Architecture and Urban Design, to meet the needs and expectations of the ever-growing millennial demographic.
“Technology is embedded in the millennial culture; they are constantly connected to social media and stream videos and music over any number of devices,” Bonilla-Verdesoto said in a press release. “As architects, we need to make sure that our designs provide the infrastructure required for a larger digital bandwidth.”
With that in mind, the Varsity on K community offers all-inclusive rent, looping in electric and gas utility costs as well as Wi-Fi and TV. Programmable thermostats, built-in USB outlets and a digital concierge package system packs new technology into residents’ homes.
More technology in the search. Tech offerings aren’t only inside the home itself. As the first generation to grow up with the internet and ever-evolving tech gadgets readily available, a level of automation and ease is expected in any decision-making process – and finding a new home is no exception.
“Today’s modern buyer starts the process online – that’s the new normal,” Walker explains. As millennials become a larger share of the homebuyer market, multiple forms of communication with real estate agents, easy access to information online and virtual document-signing are growing necessities in real estate.
For Matt Silver, a Realtor at Urban Real Estate in Chicago and board president of the Chicago Association of Realtors, automated processes like DocuSign keep the process moving. “I can put together a contract in my car and send it off” without having to go back to the office, he says.
Rather than forcing young buyers to adapt to existing real estate processes, the industry is developing to meet the needs and expectations of millennials who are used to multiple communication options, whether it's texting and video chat, or using Snapchat or Instagram to see available properties. Alternative forms of communication extend to finding information with ease online or on an app, and a quick and secure way to negotiate and sign documents remotely.
“On so many levels, technology has taken over and lent itself to the success of the real estate market,” Silver says.
More full-service offerings. While easy access to property records and listings online provides homebuyers with more information than ever before, the role of a real estate agent has begun to evolve.
Silver explains that the unprecedented amount of information consumers have at their fingertips typically gives them a more thorough foundation, but it’s the agent’s role to provide the expertise beyond that. “Information is one thing, but aggregating it is another,” he says.
Many brokerages have begun reworking their offerings to focus on providing a full service to the client – not just helping find or sell a home, but connecting the client with the necessary contractors, managing the moving process and easing the transition for everyone.
“What’s driven a lot of our growth has been [Triplemint's] focus on the buyer and seller experience, and making that the best we can,” Walker says.
Less of a hard sell. That full-service mentality means many real estate agents can focus less on the sale process and more on relationship-building with clients, which Walker says has become a common strategy across multiple industries as the millennial generation comes of age.
At TripleMint, homebuyers and sellers first interact with a member experience manager rather than an agent. The member experience manager answers questions about the market and the homebuying and selling process and gauges the individual's needs for working with an agent. Walker explains this first point of contact allows the buyer or seller to ask questions and get information from an impartial source – without having to be worried about the bottom line right off the bat.
“It’s been hugely successful for us in having a helpful, impartial person who’s really just there to answer the many questions that buyers and sellers have starting the process, without feeling like they’re being sold to,” Walker says.
She has appeared in media interviews across the U.S. including National Public Radio, WTOP (Washington, D.C.) and KOH (Reno, Nevada) and various print publications, as well as having served on panels discussing real estate development, city planning policy and homebuilding.
Previously, she served as a researcher of commercial real estate transactions and information, and is currently a member of the National Association of Real Estate Editors. Thorsby studied Political Science at the University of Michigan, where she also served as a news reporter and editor for the student newspaper The Michigan Daily. Follow her on Twitter or write to her at email@example.com.