Lifestyle changes are happening for millennials and homeownership is slated to go up
By Brian Alvarado
By any means, 2020 has been one of the strangest years our world has seen. However, despite the pandemic turning the economy upside down and putting millions of Americans out of work, the housing market continues to be a bright spot through it all.
Mortgage rates dipped to 2.98%, according to Freddie Mac’s most recent report. This is the first time it has fallen under 3% in nearly 50 years. Additionally, a recent report from the National Association of Home Builders indicated that builder confidence in the market for newly built single-family homes jumped to 72 points in July—the nation’s pre-pandemic level.
Now, with millennials making up the largest cohort of homebuyers, at 37% according to a report from the National Association of Realtors, homebuilders must play smart and cater to the most active generation of homebuyers to not only maximize success amid a pandemic, but for years to come.
According to the First American’s Homeownership Progress Index, 88% of millennials believe homeownership is important for personal success. And with the largest section of millennials hitting the age of 30, big lifestyle decisions such as getting married and having children are pushing this age group to buy rather than rent.
“Though the pandemic presents new challenges to achieving homeownership, millennial lifestyle decisions will continue to support potential homeownership demand in the years ahead, meaning millennials may be poised to fuel a ‘roaring 20s’ of homeownership demand,” said First American Chief Economist Mark Fleming.
According to another report from First American, millennial’s education attainment is another sign that homeownership for this age group is “primed for growth.” The report found that 45% of millennials at age 38 had a bachelor’s degree or higher. Generation X came in at 38%, while baby boomers were at 24%.
“Education takes time and money, which helps explain why millennials are delaying important lifestyle decisions, such as marriage, having children, or owning a home,” said First American Deputy Chief Economist Odeta Kushi. Even more millennials are expected to graduate, thus driving these lifestyle changes, which correlates to more homeownership for this age group.
Now that we’ve touched on millennials and the potential homeownership demand from this generation, the next conversation becomes what that generation is looking for in their homes, especially amid a pandemic.
In an article that’s normally dedicated to one of our regular columnists Mary Cook on page 62, Mary Cook Associates Vice President of Design Josh Kassing, who happens to be a millennial, found that outdoor space, smarter and more efficient kitchens, and living in the suburbs are the generation’s most “pressing” post-pandemic needs.
“Instant everything—from power for appliances to information to quench a thirsty brain—is more than normative for millennials since it reflects how they grew up,” Kassing said. “Without power, connectivity, smart appliance, remote controls, and design to integrate every aspect of a home’s technology, millennials will balk.”
Additionally, Kassing mentions that healthier building materials and antimicrobial fixtures, finishes, and furnishings are key when it comes to building and developing for millennials.
Aside from the needs and wants of millennials in a home, location is another factor that influences their homebuying decisions. Pre-pandemic reports indicated that millennials were beginning to flee big cities for the suburbs.
According to data released by the U.S. Census Bureau in late 2019, approximately 27,000 between age 25 and 39 left larger cities such as Chicago and Houston for greener and more inexpensive suburbs. This finding has been dubbed in the industry as “hipsturbia.”
“With the launch of 2020, millennials are gathering their new families and moving to the suburbs … but in search of a specific lifestyle,” Hunter Matthews of Newland Communities said in her column on “hipsturbia” for Builder and Developer Magazine in February. “Homebuyers are seeking a location that has the modern conveniences of an urban downtown while still offering the affordability and the ‘open air’ of the suburbs.”
Now that we’re just over four months in a pan- demic, leaving high-density, urban areas makes sense and is likely influenced by COVID-19.
According to a CNBC survey conducted back in May, 43% of millennials were considering a move into the suburbs and rural towns.
As the nation looks onward to a post-pandemic recovery and housing expected to lead the way, the stage is set for millennials to drive that narrative and enter the homebuying market. While more of this age group begin to further their careers and start families, the demand for homes will be fueled by this generation’s lifestyle changes. Homebuilders can see the writing on the wall—they must build for millennials
to capitalize on these trends. With millennials making up the largest generation in U.S. history, figuring out their needs and executing on those findings should be at the top of any housing professional’s list.
Brian Alvarado is the Editor at Builder and Developer Magazine. He can be reached at firstname.lastname@example.org.