By Tess Wittler
What influences the new home buying decisions with millennials? This was a question that Ali Wolf of Meyers Research and Cassie Cherry of Danielian Associates Architecture + Planning researched earlier this year. Here are some of the identified design and technology innovations they found that resonates with this market.
Understanding Millennials
Millennials were born between 1980 and 2000. This puts them anywhere from an 18-year-old college freshman to a 38-year-old established professional. Totaling 83 million, millennials have far surpassed the 75 million boomers, which now makes them the largest living generation.
Factors Affecting Home Ownership
Millennials fall into a spectrum—from Traditionalists to Trailblazers. Traditionalists take a more “traditional” path in life, perhaps one similar to the path their parents took. They go to school, get married, have kids and buy a home. Alternately, Trailblazers focus on lifestyle and place experiencing life and traveling as top priorities. As such, they often delay some of life’s milestones.
Research reveals that 40% of single family detached markets across the U.S. are unaffordable to first-time buyers. When the gray line is near or below the blue bar, it indicates that millennials cannot comfortably afford new homes in those markets
Additionally, there is a huge divergence between the income millennials are bringing home and where home prices are today. In the past five years, wages have gone up 10%, yet home prices have increased by 40%. This gap becomes a challenge when they decide they want to buy a home.
Affordability is becoming a big concern in certain U.S. markets. In places like Los Angeles, Washington, D.C., and Salt Lake City, affording a single-family detached home is quite challenging for a first-time buyer, yet in other markets, such as Atlanta, Tampa, and Houston, millennials can comfortably afford new homes.
Design Innovations That Resonate with Millennials
Three main themes have emerged with this home buying demographic: flex spaces, compromise and knowing your audience.
Flexible Spaces
Millennials want versatile spaces. While some traditionalists may want a formal dining room to host family gatherings during the holiday season, the reality is that most days, they use that space quite differently—as an entertainment room or an art studio. For millennials, the idea of flexible space is a resounding theme throughout the entire home. Their kitchen island can serve as their “home office,” and a spare bedroom can be a source of income from a friend who wants to rent a room.
Compromise & Doing More with Less
Data shows that millennials most want a single-family detached product, and they are willing to compromise to get into one. One big compromise is sacrificing square footage; in fact, nearly 60% of millennials own a home under 2,000 square feet—and they want every inch to fit their lifestyle. For example, builders/designer can waive including a traditional garage in their plans and provide tandem parking options instead to give buyers more indoor and outdoor living space. You can also rethink a lot setback by adjusting the home position to allow for private outdoor spaces along the long edge of the lot.
Know Your Audience
Builders who are successful in this market know their audience and develop ideas that resonate with them.
Customization: All their lives, millennials have been able to customize just about anything—from burritos at Chipotle to designing their Nike sneakers. Dream Finder Homes, for example, takes customization to an entirely new level by allowing their customers to make structural changes to the design of their homes. Don’t like a wall, knock it down.
Priced Differently: LGI Homes is an industry trailblazer by pricing homes differently. Instead of listing the home price on their website, they list the monthly payment. This helps first-time buyers—their target market—understand that they really can afford a new single-family home.
No Smart Home Technology: While millennials certainly value smart home technology, research shows they do not want it integrated into their build, in part due to the affordability factor. They want to first get into their home, then decide what home tech they want (Google, Amazon, Apple).
With 50% of millennials noting they want to buy a home in the next five years, builders/designers are wise to spend time developing the right product for their market; this begins by understanding the diversity of this demographic.
Nearly 50% of millennials surveyed noted they want to own a home in the next 1-5 year. These buyers are typically in their late 20s who are hitting life milestones of getting married and starting a family.
Editor’s Note: The source of this article’s information comes from the 2018 NAHB International Builders’ Show® (IBS) education session, “Two Millennials Tell All: Deconstructing Today’s First-Time Buyers & Their Design Preferences.” More detailed information can be found by watching this session on IBS Education On Demand.
*Photos used in this article were taken from the 2018 IBS presentation highlighted in this article.
