The Millennial Home Buyer

By Patricia L. Garcia

After getting married last summer, 29-year-old Sarah Bahner and her husband decided to look for a home. Bahner knew just what she wanted: a bungalow close to downtown Austin, where the couple spends much of their time at their favorite watering holes, restaurants and concert venues.  “Being able to live close to downtown and have the ability to walk to that kind of stuff was very appealing to us,” she says. “We thought that if we wanted to go dancing or went to see a concert, then we’d already be downtown.”

While Bahner and her husband eventually decided on a home located farther from downtown than they initially planned, she says she’s happy with their purchase. Her favorite part of her new home? “Definitely the space — our house is 2,100 square feet. When I say space, I don’t mean a huge bedroom; I mean a big, open kitchen and a really big yard where we have space to breath. I also have space to entertain and host family and friends.”

Bahner is a typical millennial when it comes to home buying. She was tired of renting, values city living and technology, wanted space and wasn’t willing to break the bank for the home of her dreams.

The term “millennial” means many things to different folks. Some consider those in the 18-34 age group to be millennials; others say it’s strictly those born after 1980. For our purposes, we’re sticking with the opinion of the Pew Research Center, which defines millennials, or Generation Y, as those “born after 1980 and were the first generation to come of age in the new millennium.” According to the Census, there were more than 80 million millennials in the United States in 2010.


The Mind of a Millennial: Shaken, But Not Stirred

The Great Recession did a number on Gen Y — think delayed adulthoods. Stunted by a lack of promising job prospects after college and crippling student loans to pay back, many young adults have put off getting married (75% are single or unmarried) or having children. Others have been forced to move back in with their parents. This has shut them out of the realm of homeownership; a recent USA Today article found that 25- to 34-year olds experienced the largest decline in homeownership rates since 2006.

Still, they remain optimistic about the future. Many indicate that they would like to purchase a home in the next two to five years. So, as the economy gains strength, this age group will become a driving force in the housing market.

“The time has never been better for young people to become home owners, whether it be a new home or existing,” said NAHB chair Rick Judson, a Charlotte, N.C., home builder and developer, said in a news release.


Where Do Millennials Want to Live?

According to the Urban Land Institute’s “What’s Next? Real Estate in the New Economy” report, millennials are tech savvy, highly mobile and lean toward urban places that foster environments that are socially diverse.

“This buyer really has an urban sensibility,” says interior designer Doris Pearlman, president of Possibilities for Design in Denver. “They want a sophisticated, urban look and feel to their communities, but they don’t want the prices that come with it nor do they want the hassles like traffic.”

Mixed-used communities in urban areas are attractive to Gen Yers. Communities with an emphasis on walkability also are at the top of the list for them. If being able to walk to shops, restaurants or work is not an option, then Millennials want to live near public transportation hubs, such as rail lines or bus stops.

But will these preferences continue to fit Gen Y’s needs as they grow older? Though Bahner was happy with her home purchase, she does admit that this will not be her “forever” home. “My parents still live in the same house I grew up in,” she says. “I can’t imagine that this house is going to fit our lifestyle in 10 years.”


What They Want in a Home

“Millennials don’t like cookie-cutter floor plans — they want their homes to be unique and personalized to their styles and tastes and to really represent who they are,” says Alicia Huey, president of AGH Homes in Birmingham, Ala., and 2013 president of the Greater Birmingham Association of Home Builders. “Because of what they’ve seen from the economy, they are quite conservative in their spending and they want value for their money.”

Huey says that rooms such as separate dining and living rooms are seen as a waste of space. An open kitchen and a home theater are preferred since they are multifunctional and because these rooms can be places to host family and friends.

“They would like to have a TV in the kitchen rather than a double oven,” she says. “Since everybody congregates in the kitchen and the media room, they want spaces to entertain in.”

Technology plays an important role in the lives of millennials, who literally grew up with the Internet. Mobile technology, in particular, has allowed them to customize just about everything they do and they expect no less in their daily lives.

“They have a greater expectation of technology than previous generations,” says Kristi Knight, vice president of marketing for Vivint, a home automation services provider. “They anticipate having a high level of interaction with their homes.”

Millennials, Knight says, like services that allow them to unlock their door, control their thermostat and receive information about when their front door opens — all via their smartphones or tablet device.

“They want to use their cellphone to launch apps that allow them to see what’s happening at home when they’re not there,” she says.

These customizable mobile technologies also allow millennials to keep their energy costs down. Generation Y was brought up on public service announcements that told them to save the planet. Recycling is nothing new to them. Saving water is a way of life. To put it simply, this is a green generation and energy efficiency is important to them.

“This generation is really energy conscious,” Huey says. “One couple I recently worked with wanted to make sure they could automate their home, so they could wirelessly control things, like a smart thermostat.”

But, there’s a catch. While nearly 40% of those surveyed by NAHB said they would like an environmentally friendly home, they wouldn’t pay more for it. This is a huge selling point for home automation companies, such as Vivint. Knight says mobile technology allows Gen Yers to have the latest home automation services without a high price


Designing for the Y Generation

There was a time when the world was smaller. You didn’t know things outside of your realm existed unless, maybe, you traveled or followed little-known publications. Not anymore.

“The biggest change I’ve seen, without a doubt, has been all of a sudden with HGTV, shelter magazines and catalogs and websites like Pinterest and Houzz — it has really raised the bar of the sophistication and design level of consumers,” says interior designer Mary DeWalt, owner of the Mary DeWalt Design Group in Austin, Texas. “Because millennials are so inundated with it, they really have an understanding of good design.”

Still, as with energy efficiency, they don’t want to pay a high price for style, says interior designer Kay Green. “They are funny in that they accept disposable furniture. They don’t have the idea that they’re going to have a dining room table throughout their whole lives,” she says. So, millennials appreciate affordable home stores, such as Ikea and Target, but also like higher-end places like West Elm and Z Gallery. It’s important to give millennials stylish choices, such as accent walls that can be personalized with color — they love color, Green says — as well as sophisticated options such as wood flooring and clean lines.

Beyond good design, what millennials really want is a home that they can personalize. This is something that even appliance manufacturers have recognized. In September, GE will release a set of appliances targeted to Gen Y. Designed by 27-year-old industrial designer Tomas DeLuna, the suite of appliances was created with a focus on aesthetics as well as affordability for first-time buyers.

“We found that the entry-level appliances like stoves and refrigerators were pretty uninspiring — they’re not very pretty and they come in a variety of colors,” says Lou Lenzi, director of GE’s Industrial Design Operation. “When you’re a first-time homeowner or your key purchasing driver is about style, you’re looking for something that says something about you and provides you with a good value.”

It’s not the first time a company has sought to court the younger set — last fall, Jonathan Adler and Kohler teamed up Kohler on a colorful cast-iron sink collection, ranging from yellow to navy. The intent was to bring punchy colors back into the kitchen.

Builders, designers and marketers understand the emotional attachment that comes with homes. Now, more than ever, it’s important to understand what drives the upcoming home-buying generation. “We can’t underestimate the wants of the buyer,” DeWalt says. “Millennials want the latest and greatest and now they can see things from all across the country and even the world. These home buyers won’t accept the cookie cutter lifestyle of former generations. They want their own footprint, so builders and designers have to work harder to make their product different.”


Patricia L. Garcia is content manager for NewHomeSource, the largest real estate site for consumers to research and select a newly built home and builder that meet their needs, lifestyle and budget.