More millennials are pursuing homeownership now than ever before. The national homeownership rate rose to 64.4 percent in the third quarter this year—an increase of half a percentage point over a year ago, according to the U.S. Census Bureau. That’s largely attributed to the rise in new, first-time home buyers.
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As 2018 comes to a close, Dana Bull, an agent with Sagan Harborside Sotheby’s International Realty who has significant experience working with millennial clients, shares five trends to expect from this generation of buyers in the coming year.
1. Rising Interest Rates Will Prompt Buyers to Change Strategy
Just last week, mortgage rates rose to a seven-year high, with 30-year fixed-rate mortgages averaging 4.94 percent. It’s more than likely that rates will climb over 5 percent in the new year. This will cause many buyers to pause and reevaluate their purchasing power and strategy, Bull says. “Even a quarter point has a real impact on housing affordability,” she says. This means you’ll need to take more time to help clients analyze deals and understand what their money can buy in this shifting market.
2. Increased Competition From Baby Boomers for Properties
As millennials age and grow in their careers, they are acquiring more purchase power. According to the 2018 National Association of REALTORS® Home Buyer and Seller Generational Trends Report, 30 percent of millennials purchased homes for $300,000 and higher in the past year, up from 14 percent in 2013. That means millennials and boomers are going head-to-head for the same homes today. That trend is only going to continue to grow in 2019, Bull predicts. Both groups also seek similar amenities, including walkable neighborhoods and smaller home sizes with more upgrades, she points out. “Buyers in different generations—with wildly different points of view—are competing for the same homes,” she says. “For sellers and agents, catering to two different generations in marketing homes will also be a challenge.”
3. Willing to Put In Sweat Equity
Millennials are becoming more savvy to renovations and repairs, and they may have HGTV to thank for that, Bull says. “Millennial buyers are still far more aware of the work, costs, and implications of a renovation than their parents would have been,” she says. “Popular TV shows mean a more educated millennial buyer who knows what to look for in terms of red flags. But also has more confidence around renovating a home to make it their own and the ability to see past outdated wallpaper or a wall that can be easily removed.” Keep this in mind as interest rates continue to rise in 2019 (re: trend number one) and you’re helping clients who want to get creative while staying in their price range.
4. Clients Who are Well-Researched and Prepared
Millennial buyers are doing their online research and are entering the market well-prepared. Show your value as a REALTOR® in other ways, Bull recommends. “They are relying on real estate professionals not to introduce them to homes, most of which they can find online, but to show them what can’t be researched: neighborhoods that are up and coming, which properties stand to gain value in the coming years, and guidance when it comes to negotiations and inspections.”
5. Social Media’s Continued Impact
Social media will continue to influence millennials’ homebuying habits, Bull says. This generation relies heavily on online reviews and social media presence to make purchasing decisions. A strong online reputation for real estate professionals is a must in catering to this market, she adds. Showcasing homes on social media—particularly Instagram—is essential for appealing to millennial clients.