- More first-time buyers are motivated by emotional factors than financial factors.
- 75 percent of homebuyers are looking for a home that they can grow into in the next few years.
- Go where millennials are and provide value and nurturing.
I’m a 32-year-old future first-time homebuyer. I’m finally ready to put down roots and buy a house in my hometown just outside of St. Louis with my boyfriend — but not for another year as to get our financial house in order. I’m moving back to Missouri from North Carolina where I had an internship as I completed my master’s degree.
So that makes me an unmarried millennial renter with student loan debt and very little savings — who wants to be a homeowner in the next year or so.
I’m uber trendy, according to the Bank of America Homebuyer Insights Report for 2016, which came out in April.
Let me show you exactly how trendy my situation is and what future homebuyers like me are looking for. Hopefully, it will help you work with clients, who might not be quick to buy and need your help to become homeowners.
The American dream is alive and well
“Our 2016 research validates what we’ve been hearing from our clients: homeownership is still an important goal, and individuals see their home — and the equity they build in it — as an important cornerstone of their everyday life and their overall financial picture,” wrote Consumer Lending Executive D. Steve Boland in his letter at the beginning of the report. “Homebuyers today are motivated by both emotional and practical reasons.”
Skipping the starter home
The report found that first-time buyers want to skip the starter home. Of first-time buyers, 75 percent would rather bypass the starter home and get something that will meet their future needs — even if that means waiting.
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I have to say that I fall into this category in a big way. I don’t have a ring on my finger or plans of having children anytime in the near future, but when I buy a home, I want to make sure that there’s room for us to grow. This is the only point of discussion in the homebuying realm that my boyfriend and I have debated more than once, but we agree — as long as we can find one in our price range.
I work from home, so I need one bedroom for an office in addition to the master bedroom plus room to grow. And though I’m not planning an engagement, wedding or children right now, I would like to have at least one (OK, maybe all three) in the next five years or so. I mean, at my age, a girl has to think about that kind of thing when planning a home.
So that would mean buying a three-bedroom house now because I have no intention of selling it in less than five years (I hate moving), especially if there’s a child involved.
Emotion vs. practicality
According to the report, “More first-time buyers are motivated by emotional factors (76 percent) than financial factors (63 percent) when making the decision to buy a home.”
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Unfortunately, in the location we’d like to buy in, that extra bedroom knocks us up in price range quite a bit — enough to make it a conversation. My boyfriend is incredibly attentive to what I want and need, but he’s being very practical with the price. And I’m thinking of our future and emotional needs, which are worth waiting for if it comes down to that.
That puts us in the same boat as the 75 percent of respondents who said they are looking for “A home that I can grow into and will fit my needs in a few years, even if it doesn’t now.” And 69 percent said they’d rather save more now to move into a nicer home in the future, as opposed to the 31 percent who want a starter home now.
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More than half of the respondents said they wanted to wait because they didn’t think they could afford a home or the type of home they’d want. Other reasons listed were paying off debt or not needing a home yet.
Other noteworthy findings
The report found these four factors are critical to today’s homebuyers:
- Cost: 82 percent
- Neighborhood: 71 percent
- Floor plan: 60 percent
- Square footage: 47 percent
For me, the exact number of square footage isn’t a big deal, and I’m willing to sacrifice that open floor plan I want for neighborhood or cost.
Like I said, we are looking for a home that’s about 30 miles from St. Louis, in the heart of the suburbia we grew up in. The report found that more than half the respondents are also looking for homes in the suburbs, including 52 percent of first-time buyers.
Here’s the breakdown of what first-time buyers want in location:
- Suburban: 52 percent
- Urban: 26 percent
- Rural: 22 percent
Like us, most first-time buyers are looking for a single-family home:
- Single-family home: 75 percent
- Townhome: 11 percent
- Condo: 6 percent
- Undecided: 8 percent
How agents can increase business by nurturing
Millennials want to be first-time buyers. In my mind, there are several factors that have caused that.
For many of us, when we finally became old enough to care about homebuying, we found ourselves smack dab in the middle of the 2008 recession. And after watching all the foreclosures — we weren’t rushing to buy.
Also, we grew up with divorce all around us. That instinct to pair off and marry young died with our parents’ nuptials. Instead, we went to college to start careers — further delaying the homebuying process either with financial obligations or not being ready to settle down.
But due to these constraints and just plain ignorance (not knowing if we can afford it), there are significant obstacles that agents have to overcome.
I think as agents, you have a massive opportunity with millennials — particularly those in their late 20s and early 30s — to increase your business. I encourage you to go where they are (on social media, in coffee houses, etc.) and provide as much value and knowledge as you can.
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Whether it’s hosting first-time buyer seminars, creating online resources through your blog or website, getting involved with local organizations — whatever it takes — get out there and let millennials know that even if they aren’t ready to buy today, you are there for them, and you’ll be there when they need you in their journey to becoming homeowners.
But be patient and nurture these leads, or they’ll find someone else when the time comes to buy.
