Millennials are the largest generation at approximately 79 million strong — surpassing baby boomers by about 4 million. Of those 79 million, 52% are contemplating homeownership, while 37% prefer the flexibility of renting.
So how can builders attract more millennials into purchasing a home?
An IBS education session entitled "The Big Move: How to Get Millennials Out of Rentals Into the Home Buying Market
," explored solutions to attracting millennials to the marketplace through affordable housing options and demographic-specific marketing. Speakers included Alaina Money-Garman of Garman Homes & Fresh Paint by Garman Homes, Allison Paul of Lessard Design, and Ryan White of Dahlin Group Architecture Planning.
Barriers to Homeownership
Today’s renter is 32 years old, single and educated, with an income of $37,500; about 29% of that income is spent on rent.
Even though more than half would consider purchasing a home, millennials have been slow to enter the housing market, Paul noted, because of student loan debt
, getting married later in life and a decrease in starter-home inventory. These factors have decreased the amount millennials are able to save and the type of home they can afford to purchase, as many are often putting down less than 20%.
Paul explained: "When you look back at their student loan debts of $37,000 [on average], that’s a down payment on a house. That’s a brand-new car they could be buying. That’s the cost of their wedding. They’re making choices in life as to what’s more important to them, and it’s a very different perspective than the boomers or Gen Xers — and even potentially the Gen Zers."
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Meeting Millennials Where They Are
More than one-third (35%) of older millennials (30-39 years old) are looking to buy a home in the next one to three years, White stated, in part because of rising rents. Major life events, such as getting married or having children, are also catalysts for a home search.
Examples of what millennials looking for, based on NAHB’s What Home Buyers Really Want study
- 82% want a garage (1, 2, or 3+ cars); 54% want access to public transportation.
- 40% want 3 bedrooms; 47% want 4 or 5.
- 57% want an exercise or media room (compared to 32% and 28% of boomers, respectively).
- 74% want a single-family detached home; unly 15% want townhomes and 7% want condos.
- 76% want an open or partially open living-dining area.
- The median desired square footage for millennials is 1,905.
Builders are getting creative in how they design high-density neighborhoods to address the affordability issue while also providing the types of homes and amenities millennials desire. Paul and White shared several examples from their businesses, including adoption of modular construction
to create developments.
Millennials also require a different marketing approach, which Money-Garman highlighted as part of the strategic plan behind Fresh Paint, a subdivision of Garman Homes specifically geared toward millennial consumers.
Fresh Paint’s business model adopts a millennial mindset through five key components:
- Make it transparent and authentic
- Make it personal
- Make it simple
- Make it give back
- Make it memorable
For example, staging model homes with products millennial buyers can afford (think Target, World Market or even Pinterest hacks) creates an atmosphere in which they can better visualize themselves. Model storytelling (e.g., using staff members’ personal photos throughout the model) also spotlights who Fresh Paint is as a company and adds an instant conversation starter to help get to know the buyers better and match them to the house they want.
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As millennials contemplate entering the home-buying market, 3% of Generation Z (ages 7-22) is already buying. Virtual reality
goes a long way with this population, with 45% wanting to tour a home virtually and 41% wanting to watch a recorded video of a walkthrough. Built-in furniture is a potential approach to attract this demographic, with its preference toward thoughtful use of space rather than increased square footage. About one-third (34%) of Generation Z is looking for a partially furnished home, while 19% want a fully furnished home.
Looking for an outside-the-box approach to tours? Consider creating an AirBnB-type model that prospective owners can “try on” for a night — or even a weekend — to see how each space feels.
“It requires a totally different silo to our business — someday I will get to do it,” Money-Garman noted. “If you can do it now, go ahead and do it. I think it’s a great way to connect with the buyer on a really cool level.”
To view this presentation
and other IBS educational seminars, visit the 2019 IBS Education On-Demand Library