Millennials make up an increasingly large portion of the housing market. At least 10,000 of them turn 21 every single day in America – more than 300,000 each month. That means millions of millennials are entering the housing market on an annual basis. As a real estate investor or landlord, understanding how these individuals operate will help you become more in tune with the marketplace.
7 Trends You Need to be Aware Of
Your average millennial is a young professional with a four-year college degree who has thousands of dollars in student loan debt. Depending on where they live, full-time millennial employees make between $35,000 and $50,000 per year. They’re highly social and constantly connected – valuing experiences over things. They feel strongly about social causes and believe in achieving work-life balance.
In terms of real estate and housing, here are some of the things you need to know about this all-important demographic:
1. Home Ownership Isn’t a Millennial’s First Priority
The first thing you need to realize is that home ownership isn’t a primary goal for millennials. Sure, some are adamant about buying a house, but the majority have other financial goals.
Most millennials want to get rid of student loan debt first – or at least chip away at a large chunk of it. Others aren’t willing to commit to living in one place for an extended period of time. In some markets, it isn’t practical – with entry-level housing priced far more expensively than they can even find approval for from lenders.
2. Millennials Are Willing to Seek Out Co-housing
As we’ve discussed before, millennials are very interested in cohousing. In other words, they’re totally fine with having roommates and would prefer to live in close proximity to others.
Millennials find cohousing desirable for a number of reasons, but two stand out above the rest:
- First off, cohousing is much more cost-effective than renting a place on your own. It essentially cuts the monthly payment in half, which is often necessary for cash-strapped millennials who are busy paying down student loan debt on mediocre salaries.
- Secondly, millennials are highly social beings. Cohousing allows them to live in close proximity with others and build meaningful relationships.
As a landlord or property manager, it’s crucial to have some rules and restrictions on cohousing so that you protect your investments and stay within the rules of the law.
3. Millennials Are Researchers
Millennials have grown up in an age of information where anything can be accessed with just a click, swipe, or swift keyboard stroke. This has molded the way they think, turning even the most laid back of millennial into a world-class researcher.
“While millennials are often misunderstood as unreliable tweeters and Instagramming idealists, as home seekers, millennials drive for security, independence, and value. Where they differ, however, is how they search for a place to live,” moving professional Dawn Macri explains. “When it comes to home hunting, 99% of millennials use the internet to find their dream homes. They leverage technology by researching neighborhoods, school systems, and homes online, while setting up digital walkthroughs. Millennial housing trends revolve around this generation’s tech-savvy approach to the home search.”
If you want a robust lead generation strategy, you need to have an aggressive online presence that’s tailored to your target market. Social media, content marketing, and SEO all play a role in this.
4. Millennials Will Move Frequently
According to the latest U.S. Census, which pulled data from 2007 to 2012, millennials accounted for roughly 24 percent of the total population, yet accounted for more than 43 percent of all movers. If anything, this trend has increased in the six years since the census. Millennials are constantly on the move, which is both good and bad for landlords and real estate investors.
The good news is there are always renters on the market looking for properties. The bad news is that it’s becoming harder and harder to keep renters locked in for long periods of time. This high turnover hurts cash flow and creates risky situations for landlords who are dependent on monthly rent to make ends meet.
5. Affordability is Very Important
Many millennials are reeling in just $2,500 to $3,500 in take-home pay. When you take into account that they have car payments, student loan payments, and other expenses, this leaves them with very little wiggle room for housing. This makes affordability a huge concern.
Most millennials are looking for small, cost-effective housing solutions that are convenient to where they work and play. With these spaces being so few and far between, it makes sense that cohousing (and living with parents) is such a popular choice.
6. Millennials Aren’t Necessarily Independent
While millennials might seem independent in some respects, many are still highly reliant on their parents – whether for emotional or financial support. This often shines through when it comes to the home search (renting or buying).
“The millennial is usually the one that researches the home online but when it comes to the showing and buying, more and more parents are getting involved in the process,” real estate agent Denise Fisher says. “Millennials are frequently getting their down payment or the whole mortgage from their parents so when they are looking it’s a family affair.”
In a very practical sense, this means that you have to persuade two sets of prospective renters or buyers. Not only does the millennial have to like it, but the parents often have to approve as well.
7. Proximity to Work and Play is Key
FOMO, or the fear of missing out, is a very real thing for millennials. Unlike their parents who are happy in the suburbs, millennials want to be in the thick of things. Proximity to work and play is very important to them when buying or renting a house.
Let Green Residential Help You
At Green Residential, property management is what we do. From lead generation and tenant screening to rent collection, property maintenance, and even eviction services, we’re here to help you from start to finish. For additional resources on Houston property management, please contact us at your earliest convenience!