Urban life has long been a perceived feature of the millennial generation's identity. The tech-obsessed, environmentally conscious, career-oriented young adults of America have developed a reputation for preferring to live in cities, where endless amenities are within walking distance and the office is just a short commute away.
According to the National Association of Realtors' 2016 Home Buyer and Seller Generational Trends Report, those preferences are changing.1 Here's what the report had to say:
- 51 percent of millennial homebuyers recently purchased a home in the suburbs
- 17 percent of millennial homebuyers recently purchased a home in an urban area
Since last year's report, the amount of millennials purchasing homes in cities shrank 4 percent, demonstrating that as millennials get older, they might just be leaning toward more traditional decisions about where to settle down and raise a family.
"The median age of a millennial homebuyer is now 30 years old."
Why the Shift from City Living?
Millennials are getting older, and in some ways the shift to suburban life demonstrates that they are beginning to make more traditional decisions about where to set down roots and raise their children. Indeed, the report found 45 percent of millennial homebuyers have kids under the age of 18 in their home.
NAR's chief economist Lawrence Yun echoed exactly that sentiment. Yun explained in a press release that the median age of a millennial homebuyer is now 30 years old, and it is around that age when people decide it's time to settle down and start a family.2
There is, however, more to it than that. Affordability is also a big driver to the suburbs, as young people are finding it too difficult to afford urban homes of the same quality as those they would find in the suburbs.
"Even if an urban setting is where they'd like to buy their first home, the need for more space at an affordable price is for the most part pushing their search further out," Yun said.
Jonathon Smoke, the chief economist for Realtor.com, agreed with the affordability explanation, explaining that many millennials, as well as many members of all generations, simply find homes in the city too expensive.3
Why This Matters
NAR's report found that for the fourth year in a row, the share of millennial homebuyers in America has grown. For the third year in a row, Generation Y has made up the largest generation of homebuyers. In the 2016 report, they accounted for 35 percent of the purchases.
In all areas, not only the housing market, the mere size of this generation means millennial preferences have an incredible influence. Their wants and needs have been known to dictate the actions of entire industries. All eyes always seem to be on them and their next moves, which is why their growing desire to move the suburbs is so important.
Other Key Facts About Millennial Homebuyers
Here are some other interesting pieces of information NAR's report revealed about recent millennial homebuyers:
- 64 percent were married
- 12 percent were unmarried - this is the largest group of unmarried buyers in any generation
- 44 percent have student loan debt, the median balance is $25,000
- 67 percent were first-time homebuyers
- 97 percent financed their home purchase
- 21 percent said saving for a down payment was the hardest part of buying a home, compared to 13 percent of all buyers who said the same
- 84 percent believe owning a home is a good investment
How to Sell a Home to a Millennial
Millennials may be the largest home buying generation, but home sellers tend to be much older. NAR's report found that the average age of a home seller is 54 years old. Chances are, millennials are looking for different amenities than these sellers looked for last time they purchased a home.
It is important for sellers to understand what millennials want in a home so they know how to properly stage for a sale, as well as what features to highlight in their listing. Here are a few things millennials appreciate:
- Open spaces
- Hardwood floors
- Environmentally sound fixtures
Open spaces are a key priority for this generation. Millennials are an extremely social generation, and they look for homes that make it easy for family members to spend time together and also make it easy to host gatherings.4 Homes with open floor plans are especially appealing, but minimizing the amount of stuff in any room can help it appear more open.
Millennials are a generation unlike any other. Despite many qualities that separate them from baby boomers, Generation X-ers and the Silent Generation, their growing suburban presence shows they may still have a few more traditional values.
1National Association of Realtors 2016 Home Buyer and Seller Generational Trends Report
2National Association of Realtors Press Release