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Meeting Home Buyer Expectations: Understanding the Millennial HGTV Generation and Their Preferences

August 30 2023

Thank you to Revive for sponsoring this article on RE Technology:

moving young coupleMillennials, stereotyped for their love of avocado toast and HGTV, are beginning to redefine real estate's landscape. The largest generation, with 72.1 million millennials in the US, also represents 43 percent of homebuyers -- the highest share of any group.

But decoding the millennial homebuyer can often feel like navigating through an intricate maze. Born between the early 1980s and mid-1990s, experts had prophesied that these young adults would be content with being urban renters, forever forgoing the suburban white picket fence. Yet, today's data tells a different story. Two-thirds of millennials see homeownership as the quintessential American dream, a Bankrate study found. Now 45% plan to buy a home in the suburbs like their parents, a stark contrast to early predictions.

However, their journey to homeownership has not been smooth. High student debt, accelerating housing prices, dwindling inventory, and rising mortgage rates have formed a formidable barrier, especially for millennials. As a result, the dream of homeownership has been delayed for many.

But as they step onto the property ladder, what truly drives their home-buying decisions, and how are they shaping the future of real estate?

Barriers to Homeownership

Despite their deep desires, millennials have not changed the housing markets because many struggle to become homeowners, negatively impacted by affordability issues, including the need for a down payment, the burden of student debt, escalating housing prices, and a lack of entry-level homes.

Millennials hold 30.4% of the total debt. In fact, 15 million millennials are grappling with student loan debt, more than any other generation. They carry an average balance of $33,173 per borrower. And research shows over 79% see student debt as a significant issue for their generation.

Moreover, personal affordability issues keep 78% of aspiring-homebuying millennials from purchasing a home, while the current housing market and economic conditions hold back 59% of them.

A National Association of Realtors report from 2022 revealed that 27% of younger millennials saw accumulating funds for a down payment as the toughest step.

A Bankrate.com survey found that many millennial non-homeowners cited limited savings and too-high home prices as reasons for continuing to rent. Over half (53 percent) of the older millennials, who aspire to be homeowners, said they could not afford the down payment and closing costs, higher than any other age group.

Younger millennials noted other hurdles, including not having enough income (49 percent), home prices being too high (47 percent), and not being able to afford the down payment and closing costs (42 percent).

Why millennials are different

Because of the challenges millennials face, their entry into the real estate market has looked different from that of other generations. Overall, millennials are buying their first homes later than their baby-boomer parents.

There are many reasons they are delaying homeownership. Still, studies show that high student debt, the enduring effects of career stagnation caused by the Great Recession, and the impact of the pandemic are among the most cited reasons.

But it's not only about money. Many millennials also are delaying traditional milestones. In 2020, the median age for a man's first marriage crossed 30; for a woman, it was over 28. Correspondingly, the typical first-time homebuyer age has increased to 36, the oldest ever on record.

One of the biggest influencers of changing housing is when a couple starts a family. Compared with earlier eras, people today have their children later in life. That also contributes to delayed homeownership for millennials.

According to demographers at Ohio State University and the University of North Carolina at Chapel Hill, despite the recent fall in US birth rates, most young people still plan to become parents but are delaying childbearing.

Another Bankrate survey found nearly two-thirds of Americans (64 percent) are willing to sacrifice to find affordable housing. Among millennials, 33 percent would buy a fixer-upper, 32 percent would move out of state, and 31 percent would downsize their living space.

Home and design preferences

For the first time, in 2022, more than half of millennials (51.5%) owned a home. However, reaching this milestone took millennials longer than any other generation.

But their real estate influence continues to grow, as does their impact on home designs and features. Research shows millennials prefer buying a smaller move-in ready home than undertaking a fixer-upper. More than any other demographic group, Millennials prefer move-in ready houses over fixer-uppers.

Designers say millennials opt for open spaces, connecting living and dining areas with the kitchen. Millennials also desire outdoor living spaces.

Because millennials are digital natives, they expect homes to have technology with smart features such as home security, automated lighting, smart locks, and thermostats.

Working from home is driving millennials' desire for home office space and workout space in the house.

Pets are also a priority for millennials, influencing their home-buying decisions. For example, 79 percent of pet-owning new homeowners surveyed by Realtor.com said that they would pass on an otherwise perfect home if it didn't meet the needs of their pets.

A Harris Poll found that 33 percent of millennial home buyers said their dog influenced their home-buying decision, outranking marriage and kids as the motivation. The study found this true among future millennial home buyers, with 42 percent surveyed saying a dog will be a crucial factor in their home purchasing decision.

Renovation and remodeling trends among millennials

The post-pandemic home improvement wave also spread to millennials. Although millennials account for less than 10% of homeowners who renovated last year, their renovation spending spiked 33% from the previous year, averaging $20,000.

With the median age of the US home approaching 40 years, remodeling and renovation is rising rapidly. Fueled by the fact that more than half of America's homes were built before 1980, 55% of homeowners reported renovating at least part of their homes in the last year.

In 2022, Americans spent an estimated $427 billion on home improvement projects. It's an accelerating trend over the last several years and is expected to continue, eclipsing $600 billion in 2025.

While kitchen renovations and bathroom remodeling were the most popular home improvement projects, a Houzz study found that millennials did more home system upgrades than any other generation, focusing on automation and security enhancements. Upgrading home offices also were a priority for millennials more than any older generation in 2022.

Not surprisingly, older millennials make the most renovations of their homes, but nearly all enjoy the result of home improvement. Researchers found that 93% of all homeowners felt they had a better quality of life after renovating.

Interestingly, millennials overall shun taking on significant home improvement debt. Industry research shows that most millennials, nearly 88%, utilize cash savings for renovations. However, 35% also rely on using credit cards, a higher percentage than older generations.

A blueprint for tomorrow's real estate

As millennials continue to navigate the intricate dance between dreams and financial realities, one thing becomes evident: they are not just participants in the housing market; they are active sculptors. With their tech-savviness, appetite for digital information, and a strong desire to become homebuyers, they offer a fresh perspective on what they want as homeowners.

Their journey teaches the real estate industry invaluable lessons about adaptability, resilience, and the undeniable power of understanding consumer needs. In embracing the millennial HGTV generation's unique blueprint, real estate professionals aren't just staying relevant; they're setting the stage for a vibrant, inclusive, and dynamic future in housing. For real estate agents and brokers, understanding and catering to this generation's nuanced needs isn't merely a sales strategy; it's a roadmap to the housing market's future.

Jessica Morrow, a seasoned real estate veteran, is Head of Operations for Revive. Revive's mission is to guide home sellers through pre-sale renovations without upfront costs. Working with Revive, home sellers maximize their profit when selling their homes.