Are Gen Z and Millennials Ready for Real Estate Purchases?
Senior Manager, Marketing
Our YouthBeat® team was recently asked a question on social media from a real estate agent regarding what our research says that might help market real estate services better to Millennials and Gen Z. Given that we’ve had Millennials in our panels since they were in grade school, and Gen Z since they were toddlers, we know them very well. Although we haven’t created any reports specifically focused on real estate services, our youth experts do have a perspective that may help real estate agents when positioning properties or approaching Millennials and Gen Z.
Millennials and the Housing Market
Millennials (born between 1982-1996) are making home purchases later than previous generations and are delaying major life events such as marriage (20% of 18- to 29-year-olds were married in 2010, compared with 59% in 1960). As they marry, Millennials will have a higher likelihood (by 18 percentage points) of purchasing a home. The reasoning behind delayed major life purchases includes Millennials having higher student loan debt and lower-paying jobs than previous generations at their age. Sixty-one percent of Millennials said they’ve delayed buying a house because of student-loan debt, according to a SoFi survey. Also, according to an article from Freddie Mac, 51% of young Millennial (aged 23-29) renters had to make a different housing choice because of student loans, compared with 38% of younger Millennials who own a home. In addition, 41% of older Millennials (aged 30-38) who rent, and 36% who own, experienced the same issue.
Many Millennials are idealistic and want a better customer experience. So for real estate agents, providing great customer service and having patience in this generation becoming homeowners will be paramount.
Appealing to Gen Z
This generation was born between 1997 and 2010, and now has a cohort of adults. They are savvy spenders and value investing their money wisely. They have seen their older Millennial friends/family get into a lot of debt and don’t want to go down a similar path. Gen Z adults between ages 18 and 21 prioritize making money and having a successful career. They tend to be more focused on the practicality of a product, long-term value, smart investments, and innovation.
Since they are just entering adulthood, enticing Gen Z with the approach of a long-term investment may be a greater selling point than merely lowering their monthly housing costs.
Home purchasing trends for our younger generations start with our current market conditions. As the Fed keeps lowering the Prime Interest Rate, mortgages should become more appealing to younger homebuyers since lower rates typically mean lower monthly payments. However, this progression may be short-lived since our financial markets are in a complicated state with the steadily increasing stock market becoming due for a decline.
Another craze worth noting is Marie Kondo downsizing and the tiny home movement. Traditionally, younger families would purchase a starter home and eventually sell it to buy a larger home. Consumers who want a good place to live in a nice area and close to a commercial hub are typically held to a certain price standard. But now many consumers are downsizing because not only are small spaces much cheaper to acquire, but they also tend to have lower maintenance costs and utility bills. The emerging younger generations have certain environmental stewardship standards making small footprints appealing given their minimal impact.
The customization of homes is on the rise. From updating their patio to adding an in-law suite for aging parents, the goal for younger people is to have a more personalized space that also looks ready to be shared on social media. “Fixer-uppers” are more attractive as they are authentic and have history but can then be customized to fit the homeowners’ needs. Part of the do-it-yourself (DIY) trend is trickling down to the younger generations, sometimes learned from their parents, who became DIYers from popular TV shows.
Finally, there could be opportunities for commercial real estate professionals to pitch empty retail spaces (malls) to these younger investors for new business ideas. As young homeowners are opting for smaller spaces to call their own, they are turning to locations outside their homes for fun and entertainment. Many of the vacant retail buildings are being repurposed into more experiential types of businesses (e.g., laser tag, escape rooms, virtual reality lounges, etc.). It looks like this could lead to business investment opportunities for Millennials and Gen Z.
Our YouthBeat® team will keep this topic on our radar as we continue to gather more generational youth research going forward. For more youth research information, sign up to receive notifications for our blog posts. Have a question of your own? Reach out as we offer a full range of custom qualitative, quantitative, and hybrid research approaches in addition to our syndicated reports.