Make way for millennials! According to the Dave Ramsey website, in 2019 millennials will lead the way in number of mortgages, accounting for 45% of the market. As the millennial generation reaches adulthood, they are moving into the housing market looking for a place to call home. However, it is not in the (credit nor debit) cards for most to be living in the city like modern TV drama would have you think. Because of historically high student debt, recession, rising real estate costs, and a challenging and stratified job market, ‘frugal’ is the word to live by. So, most millennials are looking into moving into single family suburban homes on the outskirts of 18-hour-cities.
In their quest to save money in their new homes, millennials are keeping an eye out for space with a multiplicity of use and amenities built for efficiency. No longer is it the size that matters, but how it is used. While they desire the life of suburbia, they also want to integrate some elements of urban life such as walk-ability to shopping & dining and open options for transit. Many attribute this millennial propensity toward convenience to the modern technological era: everything is now available at the click of a screen.
Regardless of the why, there is a huge disconnect between the houses which millennials want and the houses which realtors are selling. Part of the issue could be the disconnect in age. According to National Association of Realtors the average age of a realtor today is 57, and home-builders are building homes with Baby boomers and Gen X in mind. Generations before wanted mansions, but a millennials only desire is a comfortable and adaptable kind of space. Pardee Homes interior designer , Bobby Berk, summarizes the shift for millennials : “ I think we grew up around an older generation of excess, and saw what it did to everyone and the economy. It made us more of a less is more generation.”
It’s safe to say that as this new generation grows up, it’s in real estates best interest to grow with it.
Design elements are vital when selling your home to the millennial demographic.
Millennials are quickly becoming the largest segment of homebuyers. It’s vital for homesellers and their real estate agents to know their design preferences when purchasing a home. Thanks to the 2017 Taylor Morris Consumer Survey, the infograph below shows what recent and prospective millennial homebuyers are into.
One of the most recent movements in real estate is the concept of the “tiny home”. We’ve had many Realtor friends ask about how to consult their clients when it comes to buying the perfect home. There is a lot to be said about changing your lifestyle to fit a new environment- it shouldn’t be a decision made lightly. It is important to consider certain issues before jumping into the tiny house movement. Below we take a look at some of the Pros and Cons of the tiny house fad.
Ownership and Investing in your Future
Home ownership can be both rewarding and draining. In today’s market, millennials are projected to be the next big target for home buying. Having equity in your home is one of the best ways to invest in your future. Additionally, the tax benefits of owning a home are beneficial as well. On the other hand, while renting might be an appealing option- it doesn’t have monetary return. In a time where the market is finally becoming more stable, the opportunity to own a home is becoming a more attainable goal.
While owning your own home is surely an investment, you will reap the benefits of this investment when it comes time to sell. Where Tiny Home are proving to differ from standard residences is in resale value. According to an article in Forbes Magazine entitled “5 Reasons Buying a Tiny House Is a Mistake”, tiny homes are actually less marketable. There is a small concentration of individuals that a tiny home would actually work for. It seems that you would be hard pressed to find a buyer who didn’t want to entertain house guests at some point. The pool of individuals truly interested in tiny homes shrinks even smaller due to lending institution restrictions. In the same Forbes Magazine article, the author notes that lenders often have square footage requirements that must be met. This means that buyers have to be ready to pay with cash. It might be easy to make an “in the moment” decision, but you really should consider the long term value of your investment.
Since millennials are a large target for home buying- it is likely many may consider “going tiny”. In a time where we can’t go five minutes without checking our texts, or social media and email accounts- the thought of cutting out clutter and living cleaner can be appealing. The idea of being mobile and picking up and moving whenever you want might appeal to those who love to travel. For those who don’t want to be tied down to one location forever, but still want to invest in real estate- this concept may work for you. Making the “tiny home” purchase has taken the hassle of shopping for a home away- it’s now as easy as clicking a button on Amazon. Student loans do not make the idea of owning a home appealing to many millennials; debt often gets in the way of getting loan approval. The tiny home movement does have its appeal when it comes to targeting the millennial crowd.
Space- is it really feasible?
While living simply might appeal to you in theory- it might not actually work in practice. Can you really part with 75% of your possessions? If you have a bike, cooking equipment, or shoe collection- this could prove to be difficult. Individuals interested in tiny homes should really consider what they can truly part with before going through with the purchase. If there are big items you can’t part with- will they fit in your tiny home? If you cannot answer this for certain, maybe hold off on the purchase.