A robust job market and affordable credit are spurring a rise in millennials entering the homebuying market. It’s been widely reported that millennials now comprise the largest segment of homebuyers. A full 65 percent of first-time homebuyers are millennials (the National Association of Realtors puts the median age in the U.S. at 32) and first-time homebuyers make up about half of all new mortgages.
Given these figures, it’s essential for those of us in the real estate and mortgage industries to understand what makes this rising generation tick — what do they really care about and look for when purchasing a home?
Does the traditional tidy cape with the white picket fence on a tree-lined street still constitute the American homebuyer’s dream? Or is that dream evolving into something new, shaped by a generation raised on technology and stirred by social concerns over personal health, wellness and the environment?
At Ally Home, an Equal Housing Lender, we decided to find out the answers to some of these questions by commissioning an independent survey of 2,000+ U.S. adults. The survey asked these consumers how important the neighborhood is in choosing a home and to describe their preferred neighborhood “vibe.” The results were quite interesting.
House vs. neighborhood
We all know that in real estate it’s all about location. But when it comes to buying a home, location is much more than just a pinpoint on a map. It’s about the look and feel, the energy, interests and priorities of a community. Homebuyers understand that.
A full 88 percent of survey respondents said the overall “vibe” of a neighborhood is important when deciding where to live, and that number is even higher among millennials in their 30s (91 percent). In fact, more than four in five millennials (83 percent) say if they didn’t like their neighborhood, they would consider moving.
More than three-quarters (77 percent) of these millennial respondents also said they would be willing to settle for a smaller house and/or pay a little more for a house in their perfect neighborhood.
The modern millennial vibe
While the majority of survey respondents across age groups (36 percent) still wish for the quiet suburban setting with lots of curb appeal, friendly people and less of a concern to lock their doors, the millennial and younger Gen Z respondents (ages 18-39) preferred a different kind of vibe. When it comes down to what matters most to this consumer segment, here’s what the data shows:
- Access and mobility matter: Most millennials would trade curb appeal for great schools, strong online streaming/cell coverage and walkability.
- Restaurants and retail are musts: Having reasonably priced bars, restaurants and coffee shops nearby and plenty of access to public transportation was high on their list of must-haves.
- Back to nature, but only to a point: Contrary to popular belief, millennials can live without an organic market or juice press in town. And while parks and playgrounds are neighborhood musts, most say “not so much” to wide-open, wild spaces for hiking.
- Willing to sacrifice for the right home: Approximately 68 percent of respondents said they would spend out of their price range to get the home they really want.
Of course every buyer is different, and that is perhaps the most significant take-away that comes across in the data. As buyer preference patterns change, old assumptions must be set aside to give way to a new set of priorities.
As buyer counselors, Realtors have an opportunity to guide millennial buyers to think ahead of time about the characteristics that not only make up their perfect home, but their ideal neighborhood as well.
Whether their priorities are an area with a close-knit community, a place that’s walkable to stores and restaurants or even a neighborhood that is guaranteed strong cell phone coverage, today’s homebuyers have more varied lifestyle needs.
This guidance can help them target which neighborhoods would be best fit for them and give them an advantage in finding that perfect home.