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The wave of new Millennial homebuyers is just beginning, and Realtors should prepare themselves now by adapting to buyers’ housing preferences, use of technology and demand for environmentally friendly features, according to speakers at a buyer preferences forum organized by the REALTOR University Richard J. Rosenthal Center for Real Estate Studies at the recent 2015 REALTORS Conference & Expo.
NAR’s Jessica Lautz, managing director of survey research, and Chad Curry, managing director at the Center for REALTOR Technology, were joined by Jonathan Smoke, chief economist for realtor.com, to discuss buyer preferences, technologies and sustainable features that are becoming increasingly important to buyers—especially Millennials.
Highlighting some of the key findings from NAR’s just-released 2015 Profile of Home Buyers and Sellers, Lautz identified some of the myths about homebuying activity in recent years. These include Millennials not having any interest in buying a home, households leaving the suburbs in droves, and Baby Boomers selling their homes and downsizing to Florida.
“Despite Millennials’ overall share being depressed mostly for economic reasons, the allure of homeownership remains strong among a group that’s represented the largest generation of buyers for three straight years,” said Lautz. “Our data show that contrary to some of the stereotypes out there, over 80 percent of buyers in every generation are purchasing single-family homes and most of them are in the suburbs. The exception is recent buyers from the Silent Generation, who purchased condos at double the amount of Millennials."
Smoke agreed with Lautz and said the housing market is at the leading edge of Millennials buying homes.
“Historically, the 25-34 year range always represents the largest buying cohort and today, that range is the older half of current millennials,” Smoke said. “According to realtor.com traffic, we’re seeing increasing interest from this group. They’re upbeat about homeownership, but are hampered by credit qualification and saving for a downpayment.”
According to Smoke, Millennials are far less likely to buy newly constructed homes. While part of the reason is because much of the new supply coming onto the market is at higher price points, he said Millennial buyers appear to have a decided preference for existing homes. Of the qualities that are most important to them, neighborhood safety and quality of construction top the list.
On the topic of searching for a home, Lautz added that although almost half of all buyers begin their home search by looking at listings online, real estate solidly remains a business based on relationships. She said this is no surprise considering that even with the popularity and accessibility of searching for homes online, finding the right home was ranked the highest among all generations as the most difficult step in homebuying.
“Face-to-face interaction and guidance through each step of the homebuying or selling process is highly sought,” said Lautz. “This is why agent-assisted sales are currently at an all-time high.”
With most new home construction being targeted towards wealthier buyers, Curry discussed ways homeowners can modernize their existing homes with smart, energy-efficient technology to help attract younger buyers.
“Smart home gadgets and environmentally friendly features are becoming increasingly important to buyers and should be used as selling points by Realtors on a listing,” said Curry. “Furthermore, if a recently purchased home lacks these features, they make an excellent closing gift.”
Curry said Realtors and homeowners should think of a house as made up of cells, with smart gadgets playing the role of nuclei with all of the important information about how your home is performing. When a house goes on the market, having information on humidity levels and carbon dioxide ensures that the home is in top shape for potential buyers.
The panel all agreed that while the demand for green features and tech gadgets varies by region, household type and age, their popularity will only continue to rise. Having knowledge of these features and using them to market a listing will help agents keep their competitive advantage and connect buyers with sellers.
“At the end of the day, the order of housing preferences comes down to where a buyer is in their life,” said Lautz. “Commuting costs are much more important to younger buyers and decreases as they get older and raise kids. When that time arrives, a bigger home with a yard in a nice school district is likely more important.”