The real estate market is at the highest point it has been prior to the recession in 2008. With experts saying home prices will continue to rise over the next couple of years, many are worried that millennials will be unable to catch up. Is this true? If so, what does this mean for builders?
Millennials are adults who are between the ages of 22 and 37 years old. Many of these adults have chosen to forgo the American Dream of owning a home and have opted for a rent payment instead. What factors affect this decision? While student loan payments, overpriced rent and no way of saving, are financial strains the only reason keeping young adults from purchasing homes? An article by Builder (https://bit.ly/2OxYILj) says that may not be the case.
“Part of the thing is, the stock of homes--old, new, or otherwise--is not what it was in prior generations, and housing finance has been much more of an inhibitor in a post-Great Recession, Dodd-Frank regulatory era. Millennials' behavioral economic conditions, market conditions, and supply-demand conditions have all been headwinds. Still, although 35 might be the new 25 in terms of household type behavior, it appears they're all in on the deal. It's just a question of how ably the business of new home construction and development can respond to a rising tide of unmet need.”
While home prices are high, the amount of homes available to millennials is actually what may be deferring them from buying. Perhaps what millennials need are options to choose from that allow for them to mark off some of their buying checklists while staying in a budget they can afford. Home builders can take advantage of this by appealing to younger buyers.
- Smart technology. While most millennials can tell you about a time before smartphones, many won’t want to. Technology has become an integral part of society. As such, millennial home buyers are looking for upgrades that will allow them to use their smartphones to be able to control their air conditioning/heating, lighting and home security systems.
- No-hassle features. Millennials live busy lives. Most work two or even three jobs. Because of this, they are looking for stylish, low-maintenance features to go along with their busy lifestyles. These features include wood/laminate or tile floors, granite or stone countertops and gas fireplaces. In addition to built-in features, millennials are also purchasing more home warranties with their home purchases.
- Sustainability options. Millennials are looking for ways to minimize their carbon footprint. For homebuilders, this means they are looking for houses with solar panels and energy efficient appliances.
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