As most adults know, life is about compromise. No job is perfect, no relationship is perfect and no home is perfect. When you start looking for a home, it's important to go through your wish list with your real estate agent and talk about what is realistic and what isn’t – and what will cost more than you thought it would.
In many urban environments, for example, apartment-dwellers might need to forego outdoor space, especially in a place like Manhattan. In other real estate markets, buyers may find they need to compromise on things like the garbage disposal, having a doorman or gated community, architectural features or a swimming pool. That said, certain things can be added to a property or changed, while other flaws might need to just be accepted.
For most buyers, the perfect home might be financially out of reach, and many buyers find themselves settling for a home that they like (and that they learn to love) even though it’s not their original dream home. Sometimes, it’s even possible to find out that those desired features could have a huge disadvantage.
With that in mind, here are a few items you don’t need in a new home as badly as you thought you did:
- Open kitchen.
- Large bedrooms.
- Community amenities.
In the world of new construction, an open kitchen has been the common standard for many homes for more than a decade. In resale, many buyers want to know if a traditional kitchen can be opened up if it isn’t already. It seems that this is a very common want for many, particularly for people with young children or those who like to entertain in a more casual setting. But like any trend, the open kitchen floor plan may become a dated feature in the coming years. In a lot of brand-new construction, many homes now have a more traditional, closed kitchen, like in years past.
An open kitchen can be great for entertaining, especially if your kitchen is gorgeous and generally tidy, but for many buyers, an open kitchen becomes less of a must-have than they might have thought when they first started looking for a new home. If you keep a messy kitchen, it actually might be better to have your mess tucked away and out of sight.
Are you a bedroom person or a living room person? This is a question you should think about as you start to look at properties. There’s no right answer, but when space is at a premium in urban real estate markets like New York City, Chicago or San Francisco, often the square footage will be more allocated to either the bedrooms or the living room.
Bedroom people tend to spend a lot of time in those more private spaces. Maybe they bring the mail and dinner into their room and watch TV in bed. Living room people will only use their bedroom for sleeping. If you consider yourself a living room person, having a large bedroom is less important than you might have originally thought.
There is no doubt that a working fireplace adds something charming and inviting to just about any space. A wood-burning fireplace can be wonderful in the winter, but if you don’t use it, there’s little point in having it.
One home seller recently revealed that when she bought her home 20 years ago, having a wood-burning fireplace was one of the most important must-haves in her home search. Twenty-five years later, she admits that she never got around to having the flue inspected and has never used the very fireplace she thought she needed. She is now looking for a new home and although she doesn’t need a traditional wood-burning fireplace, she intends to install an eco-friendly version without a chimney to achieve a similar effect.
In many urban markets, new buildings and communities are touting their many amenities, including not only gyms and roof decks, but also conference rooms, resident lounges, pet spas, swimming pools and even wine cellars. Out of this list, the only one that is used regularly is the gym. Often when you tour a new building, resident lounges, roof decks and pet spas are empty and appear rarely used. It might be nice to have these amenities the one or two times a resident uses them during the entire duration of living in the home, but they should not be the tail that wags the dog in choosing a home.
However, sometimes we are just obsessed with certain items on our wish list that we cannot let go of – which is fair. In this situation, there is one other compromise that can be done, if your funds allow it: the price. At a recent closing, when asked if he felt he'd compromised on his wish list, the buyer said he got everything he wanted, including the chic location, large terrace, open kitchen, high ceilings and contemporary move-in ready renovation. However, this came at a high price. The apartment was significantly more expensive than the buyer's original budget. No home is perfect, and sometimes the big compromise might be the price.
The generation that's taken over homebuying
The Great Recession delayed many millennials from being able to buy a home, but the generation isn’t locked out of property ownership the way it was a few years ago. The National Association of Realtors defines the millennial generation as people born between 1980 and 1998, and according to the 2019 NAR Home Buyer and Seller Generational Trends report, they make up 37% of all homebuyers in the U.S., the largest share of any generation. Over the past five years as millennials have become a significant portion of U.S. homebuyers, they’ve also helped shape trends in location and home type preference, helped usher in technological advances and embraced new platforms that make a home purchase feel more user-friendly. Here are 10 ways millennials are changing the homebuying process.
Updated on Feb. 26, 2020: This story was published at an earlier date and has been updated with new information.Text communication is key.
Text communication is key.
The telephone was once the primary form of communication between real estate agents and their clients, but the younger generation that has grown up with internet and cellphones will likely prefer more text-based modes that make it easy to multitask. “A lot of my clients already work in tech, so their expectation is they’re going to work with an agent that can at least keep up with them in terms of communication,” says Dana Bull, a Realtor with Harborside Sotheby’s International Realty in Marblehead, Massachusetts, who specializes in working with homebuyers. She says millennial homebuyers prefer to text and email their agent more often than older generations, and it’s reasonable to expect they’ll be comfortable using real estate-related apps.Research is a natural part of the process.
Research is a natural part of the process.
When it comes to researching neighborhoods, checking out listings online and doing a deep dive into the fine print of a pending deal, millennial homebuyers are known for doing their homework. Jill Levin, a Realtor with Coldwell Banker Legacy in Albuquerque, New Mexico, says she recently represented some buyers in a deal that went particularly smoothly because the buyers read every disclosure and document sent to them and asked questions beforehand – something she doesn’t see from older buyers who feel experienced enough that they don’t need to read into the details. “There’s way more information today now, and (homebuyers) really, really should be paying attention,” Levin says.The hub for advice is online.
The hub for advice is online.
While apps and online search tools are an integral part of the homebuying process for all consumers these days, millennials are the first generation to grow up using technology broadly in everyday life. The familiarity with smartphones, social media and the internet make communication, finding out information and contacting professionals easier. Millennials are also inclined to shop around for everything from real estate agents to mortgages to contractors. In HomeAdvisor’s State of Home Spending report released in June 2019, the majority of millennials, Generation X and baby boomers research home remodel project costs on the internet, but millennials do so by the largest margin (77%).Homeownership is focused on building wealth.
Homeownership is focused on building wealth.
While purchasing a home involves plenty of hurdles for younger buyers, many of them are choosing to become homeowners because it helps them build wealth in the long term. “There is still interest in buying a house because I’ve got a job, I need a place to live, rent is expensive and I should put my money somewhere,” Bull says of the millennial homebuyer mindset. As they build equity in their home, they’re in a better place to purchase a larger house in the future or use the profit of a sale for other investments.Kid-friendly housing makes a comeback.
Kid-friendly housing makes a comeback.
Homeownership isn’t the only thing that millennials are doing later in life for financial reasons. Millennials are also marrying and having children later than previous generations. But as millennials get older, more are getting to the point where they’re starting families. While a condo in the heart of downtown worked for many first-time millennial homeowners when they were single, home preferences change as soon as kids come into the picture, Bull says: “People are starting to step up into that next level of a single-family home and maybe out in the suburbs.”Walkability is a must.
Walkability is a must.
Even with many millennials leaving urban centers, one feature they won’t compromise on is walkability. “They want more activities in the area, they want walkability, they want the convenience of shopping without having to use their cars a lot,” Levin says. Even in more suburban settings, many millennials are showing a preference for areas that offer residential and commercial spaces within walking distance. Bull says the areas catering to these homebuyer preferences have been dubbed “hipsturbia,” where suburban towns offer an active downtown or main street area with the live-work-play atmosphere many people don’t want to lose when they move out of a major city center.Eyes are on garages and kitchens.
Eyes are on garages and kitchens.
Luxurious features and finishes in a house are ideal, but millennial homebuyers are making their must-have lists a bit more realistic. In a survey of 1,000 Americans who plan to purchase a home in 2020 by real estate information company Clever, millennials' preferred home features focused on details that make life more convenient, especially as they start families. When asked which features are a requirement for their new home, millennial respondents placed a garage, large kitchen and space to grow into as their top three priorities. Details like hardwood flooring, a fireplace, pool and dedicated office space were among the lesser-desired details.High home prices don't deter eager buyers.
High home prices don't deter eager buyers.
Affordability is still an issue for many millennials, especially among the younger members of the generation. But that doesn’t mean millennials are uninterested or afraid of purchasing a home – it’s just a matter of the right timing, the right location and the right home. Between consistently rising home prices and a lack of inventory as homeowners choose to remain in their homes longer, the housing market remains extremely competitive, Bull says, especially in the Boston area where she works. But the millennials who are financially ready to purchase are willing to rise to the challenge. “They’re used to being aggressive to get into the college they want, and then get the job they want,” Bull says, which primes them to make a strong offer if they see a home they like.Low down payments solve savings issues.
Low down payments solve savings issues.
The Clever survey found 70% of millennial homebuyers plan to make a down payment of less than 20%. Low down payment programs have grown significantly in the past 10 years and are now a major part of home purchases – NAR’s 2019 Profile of Home Buyers and Sellers reports that the median down payment for a home in the U.S. is 12% of the purchase price. While low down payment programs help resolve the lack of savings, homebuyers putting less than 20% down should be sure to factor into their budget the added monthly cost of private mortgage insurance.Parents play an important role.
Parents play an important role.
For younger millennials and even Generation Z, which is made up of people born in 1999 and later, coming up with the cash for a down payment is one of the biggest obstacles to becoming a homeowner, even at less than 20% of the purchase price. For millennial first-time homebuyers and the rare Gen Zer getting into the market, financial help from a loved one is often what makes a home purchase possible. “Parents are getting involved a lot – I still see a lot of situations where parents are gifting money or helping in some other way,” Bull says. “I don’t see that changing at all.”Here are 10 ways millennials are changing homebuying:
Here are 10 ways millennials are changing homebuying:
- Text communication is key.
- Research is a natural part of the process.
- The hub for advice is online.
- Homeownership is focused on building wealth.
- Kid-friendly housing makes a comeback.
- Walkability is a must.
- Eyes are on garages and kitchens.
- High home prices don't deter eager buyers.
- Low down payments solve savings issues.
- Parents play an important role.