“Millennials” are people born between the early 1980s and the early 2000s, with the core of the group between the ages of 18 to 34 years old. Whereas it was once believed that given the real estate market, this demographic was “sidelined by high unemployment, student loan debts, and tight credit,” new studies now show that they are, in fact, the most active generation of buyers accounting for slightly more than a third of all home purchases.
Why does this matter?
Knowing our most active customer base is an important part of any business. Understanding a demographic and current trends are essential for doing well in the marketplace. According to the National Association of Realtors 2018 Home Buyer and Seller Generational Trends study, millennials home purchases ticked up over the past year and have seen an increase for five years in a row. 86 percent of millennials believe that buying a home is a good financial investment, which places their demographic among the ones to which we should pay close attention.
What drives Millennial buyers? What do they need?
Millennial buyers want to live closer to family and friends over the home’s location. They have shifted from migrating to urban areas due to few affordable options. Additionally, if your millennial client has at least one child, he or she will be heading for the suburbs. Recent studies show that over half of the millennials that purchased homes had a need for a larger house at an affordable price outside of the city. Millennial buyers need inventory. Millennial buyers have found some limit with home purchases due to inventory constraints that continue to drive up housing costs causing them to continue renting. It seems cyclical in that many other older adult buyers are not selling due to adult children (above 18 years old) continuing to live at home with their parents.
What do Millennial buyers want from a real estate agent?
According to the NAR study, millennial buyers need guidance in understanding the buying process, which is why 90 percent of millennials (the highest percentage generationally-speaking) were likely to purchase a home through a real estate agent. Due to increased student debt balances and lack of inventory driving prices up, millennials struggled to save for a down payment. With 65% of millennials being first-time home buyers, the guidance and assistance of a real estate agent was essential.
What should I know about Millennial buyers?
According to Real Estate Express, “when marketing to Millennials, consider these helpful statistics on Millennial home buyers and trends, as provided by Inman and the National Association of REALTORS® Home Buyer and Seller Generational Trends Report 2017 and 2018”:
- 90% of Millennials would use a real estate agent. Yet, they may be harder to please compared to other generations.
- 63% of Millennial home sellers would use their agent again, or refer the same agent to another. These are the lowest percentages of any generations surveyed.
- 70% of Millennial home buyers would hire their agent again, or refer them to another.
- 45% to 50% of Millennials originally found their real estate agent through a friend or family member.
- Partly due to outstanding or delinquent student loan and credit card debt, the average Millennial credit score is 625 (per NerdWallet). As such, they are more likely to qualify under more flexible FHA-insured home mortgage loans.
- Millennials are more into social media and texting than any generation ever. Yet, 75% of Millennials polled also like to be contacted by telephone calls.
- Millennials love the internet for communicating and finding real estate opportunities. Upwards of 94% of Millennials use online websites for home searches. 51% of Millennials later found the home they eventually purchased online first.
- Millennials do love their high-tech gadgets but still rely on the wisdom of real estate agents, as noted by 90% of them eventually going to agents for assistance.
Millennials now make up 36% of all home buyers nationally, which is the largest proportion of any generation. The Gen X home buyers make up 27% of buyers. Younger Baby Boomers are reported at 16% of buyers, and older Baby Boomers account for 15% (31% combined).
It’s important to understand how to leverage technology on your largest potential customer base. Using the REALLY™ app has a whole host of benefits with regard to servicing the current largest customer demographic. Considering that about 50 percent of millennial home buyers were referred an agent through a friend and 70 percent of buyers and 63 percent of sellers would use their agent again, harnessing the power of REALLY’s referral network has the potential to increase those percentages and to substantially affect the referral commissions earned by those facilitating agents. Additionally, with many millennials leaving the city and opting for the suburbs, the REALLY™ app allows for you to refer your client to a vetted, verified agent you can trust. As the market evolves and changes daily, having access to a community of professionals like those on the REALLY™ app will only serve to inform and grow your business practices and profits.