Zillow’s new Zillow Group Report on Consumer Housing Trends, authored by Stan Humphries, Chief Analytics Officer and Chief Economist, is a remarkably valuable 21st Century addition to the body of research profiling the changing face of residential real estate.
Its many jewels of new or intuitive findings regarding the mysterious Millennials, the generation that so far has defied expectations, are worth noting Here are some the brighter gems that might help to unmask the Millennials.
Market domination. Millennials, ages 18-34, comprise 42 percent of all home buyers today, while an additional 31 percent of buyers are members of Generation X (ages 35-49). Baby Boomers (ages 50-64) and the Silent Generation (ages 65-75) together make up the smallest share of home buyers (26 percent), with only 10 percent of buyers over age 64.
Millennials buy later and buy up market. Millennials are delaying many life milestones that precede homeownership, such as completing their education, getting married or starting families, and thus are renting deeper into adulthood. When Millennials do become homeowners, they leapfrog the traditional starter home and jump into the higher end of the market by choosing larger properties with higher prices, similar to homes bought by older buyers. They pay a median price of $217,000 for a home, more than Baby Boomers, and just 11 percent less than Generation X. The Millennial median home size is 1,800 square feet, similar in size to what older generations buy. The modern-day starter home is nearly as large as the median home for move-up buyers and costs about 18 percent less.
New homes are on the table. Younger buyers (50 percent of Millennials and 54 percent of Generation X) are significantly more likely than Baby Boomers or the Silent Generation (38 percent and 39 percent, respectively) to consider newly built properties. Nearly half (48 percent) of all buyers are considering new homes.
Millennials less likely to use agents. The older the buyer, the more likely that buyer is using an agent. Baby Boomers and the Silent Generation rely most heavily on an agent or broker for real estate guidance, with 83 percent and 81 percent respectively citing them as a resource in their home search. Seventy-four percent of Generation X buyers report using an agent, followed by 70 percent of Millennials. When they enlist an agent, they do so earlier in the home-search process, shop for a home faster than most older generations, and are more likely to stay in touch with an agent.
Do a better job of shopping for agents. The average number of agents all buyers consider hiring is 2.2. Sixty-eight percent of the Silent Generation and 57 percent of Baby Boomers considered only one agent, compared to 44 percent of Generation X and 38 percent of Millennials considering just one agent. Millennials are particularly likely to evaluate an agent online, including reading online reviews (61 percent) and delving into past sales data (57 percent).
In an agent, Millennials want a partner, not a control freak. The process of finding or selling a home is much more collaborative for Millennials than for older generations. They bring all available tools to the process, including their smartphones, social media, and online networks. While older generations rely on real estate agents for information and expertise, Millennials expect real estate agents to become trusted advisers and strategic partners.
Definition of household is changing. Seventeen percent of younger Millennials (ages 18-24) are shopping for a home with a friend or roommate, with an additional 51 percent shopping with a spouse or partner. Older Millennials (ages 25-34) are more like the average buyer, as 73 percent are shopping with a spouse or partner. Seventeen percent of younger Millennials (ages 18-24) are shopping for a home with a friend or roommate.
Millennial are not sold on buying. Millennial buyers (71 percent) are the most likely to consider renting. As buyers age, their interest in renting declines. Just over half, 54 percent, of all Generation X buyers considered renting compared to about one-third (32 percent) of Baby Boomers. Only 18 percent of those 65 years and older considering renting as well as buying.
Millennials social support in decision-making. Millennials rely on their personal networks. They’re the generation most likely to turn to a friend, neighbor, or relative to share the details of their home search (58 percent, versus 52 percent of Generation X buyers, 42 percent of Baby Boomers, and 37 percent of the Silent Generation). Millennials seek input from friends, relatives, and neighbors 58 percent of the time, versus the Silent Generation, who poll friends just 37 percent of the time.
Millennial home buyers are more diverse. Fourteen percent of Millennial buyers are Latino/Hispanic, whereas roughly 11 percent of Gen X, 7 percent of Baby Boomers and 6 percent of Silent Generation buyers are Latino/Hispanic. Some 6 percent of Millennials are black/African-American, a smaller share than Gen X (9 percent) or Boomer (8 percent) buyers who are black/African-American.
They are more suburban than urban animals, and they buy locally. Nearly half of Millennial homeowners live in the suburbs (47 percent), while one-third settle in an urban setting (33 percent), with eight in 10 adults under 25 living outside an urban core. While only 11 percent of buyers are moving out of state, it’s notable that older buyers are more likely to make these long-distance moves. While just 7 percent of both Millennials and Generation X are moving across state lines, Baby Boomers and the Silent Generation make such moves 20 percent and 29 percent of the time, respectively.
Millennials aren’t just buyers. The biggest group of home sellers belongs to Generation X (38 percent). A quarter of home sellers is Millennials (26 percent). Eighteen percent of sellers are Baby Boomers, and 19 percent are from the Silent Generation.
Young landlords. Millennials are the most likely to rent out their primary home for income (6 percent) or have plans to do so (11 percent), while older owners have less interest in using their primary home for rental income.