Millennials are the largest demographic group in the U.S., so it should come as no surprise that they are fast-becoming a dominate force in the residential real estate market. These individuals, born 1980-1995, represent 32% of homebuyers and 15% of home sellers, according to the NAR’s “2015 Generational Trends Report: Millennials.”
This report outlines four important characteristics of Millennials:
68% were first-time home buyers
7% purchased a multi-generational home
Sellers are typically moving to larger homes
The motivation to buy is the desire to own a home
Challenges for Millennial Homebuyers
While the promise of big returns on investment in Millennials will inevitably become a reality for REALTORS® across the U.S., several challenges currently exist in working with this group. Two of the more notable challenges are limited job prospects and student loan debts. Both of these issues have made it challenging for Millennials to save for the down payment needed to take advantage of low interest rates in the current economic recovery.
Top Housing Markets for Millennials
Even with these challenges, there are several markets in the U.S. where stronger economic conditions and ample inventory are providing excellent opportunities for Millennials to be highly-active clients for REALTORS®.
To determine the best purchase prospects for young buyers, NAR analyzed 100 metro areas that have a large Millennial presence, solid local job market conditions and strong migration patterns of young adults moving to those particular areas. Housing affordability and inventory availability were also considered. This data, stemming from NAR research, the Bureau of Labor Statistics and the American Community Survey, cited the following 10 markets as most likely to bring immediate home sales opportunities to Millennial home buyers.
1. Austin, TX – already has a large number of Millennials while job growth remains strong
2. Dallas, TX – has a large number of Millennials living in the city and strong job growth
3. Denver, CO – has seen a solid inflow of Millennials while it shows promising job growth and gains in median home prices
4. Des Moines, IA – has a large number of Millennials moving to the city and a low unemployment rate
5. Grand Rapids, MI – many Millennials have moved to this market where job growth is strong and homes are very affordable
6. Minneapolis, MN – has experienced a solid inflow of Millennials and has a growing inventory of homes for sale
7. New Orleans, LA – Millennials have been moving to this market where the unemployment rate has shown significant improvement
8. Ogden, UT – a large number of Millennials are finding this market brings low unemployment rates and favorable inventory conditions
9. Salt Lake City, UT – has a low unemployment rate and inventory choices are expanding
10. Seattle, WA – Millennials continue to move to Seattle where the inventory of homes for sale is expanding and unemployment is falling
Like generations before, breaking into and navigating the home buying marketplace will always bring its share of challenges. But Millennials are a generation that believes homeownership is part of the American Dream; thus, they are highly motivated to buy, and plan to do so soon. Combine this with improving economic conditions and the sheer size of this group and it makes sense for REALTORS® to develop a Millennial marketing strategy for the immediate future and beyond.