The list of ‘wants’ is long when it comes to the millennial market, but which are the highest priority?
You Can’t Always Get What You Want,” a song written by Mick Jagger and Keith Richards, could be the anthem for today’s millennial homebuyer nearly 50 years after the Rolling Stones released Let It Bleed. According to a National Association of Home Builders (NAHB) tracking survey, millennials want a big home, 2,375 square feet on average, compared to 2,202 square feet for all buyers. But, with a median household income of $40,581, according to USA Today, millennials earn 20 percent less than boomers did at the same stage of life despite being better educated.
Research done by NAHB found that more than 90 percent of millennials say they eventually want to buy a home. While the millennials would prefer to live close to jobs, in San Jose, one of the best job markets for millennials, a 20 percent down payment on the median priced home would be $192,320, over 180 percent of the median income. Research results tells us that when they’re younger and renting, the central city is where they want to be. But, when it’s time to buy a home, they want to go to the suburbs. They are interested in park areas and, typically, a suburban neighborhood. And, if they can’t quite afford that first home, they would drive farther to work, schools, or shops.
The savvy homebuilder who banks on the young homebuyer being willing to accept less square footage for the right location must make the floor area they do provide flexible enough to adapt to their needs.
Although we may be back to a “drive until you qualify” mentality for the first-time homebuyer, millennials are buying! They are the largest group of homebuyers, according to Ellie Mae, a mortgage data company. In January, millennials represented around 45 percent of all purchase loans, up from 42 percent the same month in 2016. ‘NAHB survey results indicate that over half of millennials prefer two-story homes and more than three quarters desire an open-concept floor plan. A shocking 48 percent want four or more bedrooms! This can probably be attributed to the NAHB’s tendency to ask those they are surveying what they “want” as opposed to what they “can afford.” But respondents did say they would sacrifice extra finished space.
One potential solution to sacrificing that finished space is flexible design that allows a single room to serve as a bedroom, an office, a conference room, or could pull back to allow for a more expansive great room for an additional entertaining area. The savvy homebuilder who banks on the young homebuyer being willing to accept less square footage for the right location must make the floor area they do provide flexible enough to adapt to their needs. Many millennials still want to be close to the vibrant urban core where they rented and still work and will look for another solution to qualifying: living “urban adjacent.” Forward-thinking municipalities like the City of Los Angeles with their small lot ordinance are giving millennials a chance to afford a single-family home at densities as high as 30 to the acre. Communities like Gaspar in Echo Park give the first-time buyer everything they are looking for, a single-family home, bedroom count, open-floor plan, outdoor living, and proximity to downtown in a very compact
footprint that makes it more affordable.
The outdoor living like the roof decks at Gaspar comes out on top in a Better Homes and Gardens’ survey, “You and Your Home.” Three out of four of those under 35 said outdoor space is important for entertaining and 51 percent dream of having an outdoor kitchen sink, cooktop, refrigerator, and a grill.
Another myth buster, according to John Burns Real Estate, is that “Gen Y is not all about contemporary.” Instead, when asked to choose a preferred style from photos reflecting a range of popular designs in Burns’ research, millennials selected “Modern Traditional” as the most preferred style, followed by “Style on a Budget,” “Casual Organic,” and “Modern.”
The AmeriFirst Homebuyer Learning Center agrees with affordability, flexibility, and entertainability comprising three of the four features that first-time homebuyers want on their checklist. The fourth is efficiency. Millennials have grown up with the green movement and talk of carbon footprints, but beyond that, energy efficient homes help on the affordability front. NAHB’s survey says they would pay 2 percent to 3 percent more for energy efficient features.
While NAHB research may tell us what the millennials’ “want list” is in a new home, the Stones lyrics ring true “you can’t always get what you want.” But, if the homebuilding industry builds the right product in the right location, the millennials might discover “…if you try sometimes well you just might find you get what you need.”
Manny Gonzalez, FAIA, LEED AP is the managing principal of KTGY Architecture + Planning’s Los Angeles office. He may be reached at firstname.lastname@example.org or 310.439.3951