What Is A Millennial?
Before we go much further, let’s define what a Millennial actually is. Luckily there are a number of reports that we can look to for more information.
And these reports explain why this group is so economically important to businesses.
- Millennials are those typically born between 1982 and 2002. Which means they are those people who are 13-33.
- Millennials are now the largest, most diverse generation in the country’s population, representing over a third of the total U.S. population.
- The significance of Millennials extends beyond their numbers. This is the first generation to have had access to the Internet during their formative years.
- No generation in our history has been influenced by technology as much as Millennials have.
This Group Is Diverse
Millennials also stand out because they are the most diverse and educated generation to date:
- 42 percent identify with a race or ethnicity other than non-Hispanic white, around twice the share of the Baby Boomer generation when they were the same age.
- About 61 percent of adult Millennials have attended college, whereas only 46 percent of the Baby Boomers did so.
- Millennials are the generation that will shape our economy for decades to come .
- Millennials are less likely to be homeowners than young adults in previous generations as 49% of 12th grade Millennials said that living close to family and friends is very important to them, a 40% increase over what baby boomers said at that age.
They DO Want To Buy Houses!
Despite all of the doom and gloom and seeming self-interest of this group, they actually do want to buy homes. According to the 2015 National Association of Realtors® Home Buyer and Seller Generational Trends study, the largest group of recent buyers was the millennial generation, those 34 and younger, who composed 32 percent of all buyers.
The median age of millennial homebuyers was 29, their median income was $76,900 and they typically bought a 1,720-square foot home costing $189,90.
Armed with this data, it seems it would be pretty easy to target millennial homebuyers. And for you real estate investors reading this…this group of homebuyers isn’t looking for the “We Buy Houses” type of marketing.
In fact if you’re using any of that traditional crap, they won’t even see your deals. 90%+ of millennial homebuyers use the mobile web.
The problem with millennial homebuyers isn’t that they’re not interested in buying houses.
Unlike their other demographic counterparts, these homebuyers want to live in the city. Downtown is where most millennials want to live.
They are most influenced by the quality of life in a neighborhood and the convenience that the neighborhood offers.
The problem is that they are being priced out of a lot of the markets that they want to live in.
Pricing Out The Millennial Homebuyer!
Millennials have been priced out of some of the biggest U.S. cities, with residential real estate prices rising even as wage growth remains elusive.
Bloomberg used data from the U.S. Census Bureau, Zillow Group Inc. and Bankrate.com to quantify how much more money millennials would need to earn each year to afford a home in the largest U.S. cities. The good news is that out of 50 metropolitan areas, 37 are actually affordable for the typical 18-34 year-old.
The bad news is that the areas that often most appeal to young adults are also the ones where homeownership is the most out of reach.
So How Does This Information Benefit The Real Estate Professional?
Now that you understand the significance of the Millennial market, now let’s understand why this information is important to you.
A recent report by the Joint Center for Housing Studies of Harvard University concluded that:
“the number of households in their 30s should increase by 2.7 million over the coming decade, which should boost the demand for housing.”
That’s a HUGE number. I’m all about being on the front end of the bell curve. There’s a lot to be said about being an early adopter. You can’t ignore the sheer power and size of this market and here’s what I’m going to be doing.
1. Find those neighborhoods that millennial homebuyers will desire and begin studying the trends and forecasts for those areas
2. Find those neighborhoods that this buyer demo can afford
3. Find creative ways to help get these buyers into homes. Look at holding paper, lease-options, owner-finance…etc…find a way to get these buyers into homes in neighborhoods that they want to live in and you’ll be printing money!
4. Talk to them in the manner in which they want to be talked to. That means understand the lingo and build relationships. This group will NEVER respond to traditional means of marketing!
Think about that for a moment…think about that long and hard. The biggest group of current and future homebuyers will NEVER respond to ads, letters, signs, postcards…etc
The prudent business person who truly understands the marketplace would govern themselves accordingly.