Millennials make up more than 50 percent of all first-time home buyers and represent a growing segment of the Washington-area population. These young professionals and activists are looking to make their mark on the world at the epicenter of American politics and culture.
Despite lingering college debt, millennials hold a significant amount of buying power and many see the value of investing in a home versus renting. As products of the information age, they are more committed than their predecessors to the search process and are eager to absorb information from peers, reference sites and, of course, local real estate professionals. Their mobile lifestyle coupled with their innate curiosity will likely result in pursuing real estate transactions more frequently than generations before them, buying and selling at an even higher rate.
To underestimate the millennial influence on the Washington real estate market is to bypass a major opportunity. Here are a few things sellers need to know about millennial buyers and what they look for in a home:
Call it the Instagram effect, but millennials are in search of the “picture perfect” home. They’ve grown up watching house tours on HGTV, scrolling through Instagram photos of perfectly staged homes and making Pinterest boards of their dream home. And while the DIY trend has its appeal, not everyone has the time or resources to take on a fixer-upper.
Busy with work, community causes and social activities, most millennials don’t have time to tear down, remodel or replace. They are looking for a home that is move-in ready — the ideal aesthetic, with little to no maintenance. While some buyers may be willing to take on deferred maintenance in exchange for a price cut, millennials are less likely to go for this. They want a home that looks and operates in ship shape so that they can focus their time on work, travel and political and social engagement.
The right home at an affordable price
Millennials came of age in the housing crash of 2007 and the subsequent recession of 2008. When they entered the workforce, they faced a post-recession job market and their salaries are just catching up. Today, low interest rates have made ownership more affordable with payments comparable to monthly rent, especially in the Washington area.
These factors and experiences continue to inform millennial purchasing habits — they are looking for great value at an affordable price. As the first generation of digital natives, they have a knack for scouring the Internet to research and find the best price on everything from clothes to groceries. The way they shop for homes is no different — they will take their time and do their due diligence until they find the perfect house for the right price.
The generational difference
Each generation of home buyers has its own unique set of values and priorities. Gen X-ers and baby boomers were more willing to overlook deferred maintenance issues in return for a better price. A broken dishwasher? Probably not a dealbreaker for a baby boomer. They would fix it, save to buy a new one, or negotiate appliance costs into the sale of the home. In contrast, a millennial might walk away from an otherwise great property to avoid the hassle of repairing or buying new.
The social and cultural value of a property is another factor to consider when looking to attract millennial buyers. While Gen X-ers and baby boomers tend to prefer the privacy of the suburbs, millennials want to be in the middle of the action, with a bevy of cultural, food and entertainment options all around.
Winning the millennial buyer
So how can sellers catch the eye of millennials? Since millennials are looking for move-in ready properties, it’s critical to stay on top of regular maintenance. Sellers should make any necessary updates, such as exchanging old kitchen appliances for stainless-steel appliances, replacing carpet with hardwood floors or adding outdoor living features — before listing on the market. If sellers are not able or willing to make updates, they should consider lowering the price of their home — according to market values — to compete for millennial buyers.
As the millennial presence in Washington continues to grow, sellers should work with their real estate agent for guidance on how to update and market their home to tap into this new audience. Though different than the generations before them, they hold significant buying power and are eager to engage in the home-buying process.
David Charron, chief strategy officer of Rockville-based multiple-listing service Bright MLS, writes an occasional column about the Washington-area real estate market.