Whether or not you see millennials as relentless selfie takers with their noses in their phones or the next trailblazing generation of the modern age, there is no denying the economic importance and power millennials have over our planet. And that doesn’t just apply to the latest clothing trends and iPhones; they are becoming a serious market in both the real estate and business worlds.
Everyone from condo developers and landlords to media outlets and magazines have been racing for years now to obtain the attention and approval of the millennial generation. Millennials, those born between the early 1980s and the late 1990s, aren’t the teen to young adult demographic you may be imagining. Millennials are aging, graduating, gaining employment and with that, wealth. Their real estate preferences and spending habits are evolving.
“Millennials are finally starting to look at the housing market,” said Realtor.com’s chief economist Danielle Hale.
Although we are reaching a point where millennials are moving towards purchasing properties, they are still largely tenants, with more than 18 million millennial-led households renting at last count – more than any other group. A large portion of them have postponed buying homes because they are weighed down with student loan debt. Not to mention, Hale noted that with construction down, there are “not a lot of properties available for them”.
Despite this, in 2017, millennials officially surpassed the baby boomer generation as the most borrowers for high-end mortgages. They’ve dominated the market for smaller mortgages since 2013; overtaking high-end as well is further proof of the growth they are making towards becoming the dominate market.
Meanwhile, boomers, many of whom are parents of millennials, are still a vastly important part of the real estate demographic. As millennials graduate college, move out, and begin to purchase their own properties, baby boomers are becoming empty nesters. They are selling their homes, moving back to cities, downsizing, or deciding to rent. Overall, real estate players need to keep the markets for both generations in mind.
Last year alone millennials injected $514 billion dollars into the U.S. housing market. That is no number to take lightly. At 83 million strong, they are now the leading age group in the country, overtaking their predecessors in marketing power. Not only that, but they took out 40 percent of home mortgages last year, and, according to a 2017 report, they now account for more than a third of U.S. home buyers. It might be time to take millennials buying power a little more seriously.
Although millennials may be the up-and-coming power to watch out for, 53 percent of U.S. residential properties are still owned and occupied by the country’s 75 million baby boomers. By comparison, millennials own 11 percent, although that trend is on its way to reversing. So, while millennials are a growing market, boomers are still going strong as a large part of the real estate world, owning most residential properties. With that in mind, its important to understand the unique wants and needs of each generation, and as a real estate professional, to make sure you can help achieve them.