Millennials are the most powerful group of Americans driving the current and future directions of the housing market for both rentals and purchases. In 2015, they finally overtook Baby Boomers as the largest generation, and the core group of Millennials is now reaching the 18 to 34 year age range. In other words, Millennial home buyers have entered the housing market in a big way. As a real estate agent or investor, you’ll want to start building marketing campaigns that are targeted toward this powerful group. Start by gaining a better understanding of the demographic trends of potential buyers, sellers, lessors, and lessees in your area—especially Millennials. Then learn how to connect and build relationships with these important real estate prospects.
Who are the Millennials?
Sometimes labeled as “Generation Y,” Millennials are people born between the early 1980s and the early 2000s. They were projected to surpass 75.3 million people as a group in 2015, according to Pew Research Center. Millennials are now within age ranges where they are most likely to need a place to either lease or purchase. Many of them (or at least those who can afford to do so) are beginning to buy their first homes and invest in real estate for the first time.
Millennials’ buying and leasing trends
Sadly, Millennials have the highest rates of outstanding student loan debt, higher national unemployment rates, and more challenging mortgage loan underwriting guidelines. These factors are likely holding some of them back from purchasing a home. But even so, Millennials now make up 32% of all home buyers nationally, which is the largest proportion of any generation. Those who can’t qualify to purchase are still quite motivated to lease in more urban, metropolitan regions near jobs, restaurants, schools, and entertainment centers.
Here are some helpful statistics on Millennial home buyers and trends, as provided by Inman and the National Association of REALTORS® Home Buyer and Seller Generational Trends Report 2015:
- 90% of Millennials use a real estate agent. Yet, they may be harder to please compared to other generations.
- 63% of Millennial home sellers would use their agent again, or refer the same agent to another. These are the lowest percentages of any generations surveyed.
- 70% of Millennial home buyers would hire their agent again, or refer them to another.
- 45% to 50% of Millennials originally found their real estate agent through a friend or family member.
- Partly due to outstanding or delinquent student loan and credit card debt, the average Millennial credit score is 625 (per NerdWallet). As such, they are more likely to qualify under more flexible FHA-insured home mortgage loans.
- Millennials are more into social media and texting than any generation ever. Yet, 75% of Millennials polled also like to be contacted by telephone calls.
- Millennials love the internet for communicating and finding real estate opportunities. Upwards of 94% of Millennials use online websites for home searches. 51% of Millennials later found the home they eventually purchased online first.
- Millennials do love their high tech gadgets, but still rely on the wisdom of real estate agents, as noted by 87% of them eventually going to agents for assistance.
- Millennials now make up 32% of all home buyers nationally, which is the largest proportion of any generation. The Gen X home buyers make up 27% of buyers. Younger Baby Boomers are reported at 16% of buyers, and older Baby Boomers account for 15% (31% combined).
How to connect with Millennial home buyers
Millennials grew up with high tech gadgets, desktop computers, and smart devices. They have short attention spans, and they love their technology. When marketing to Millennial home buyers, know that they are more likely to respond to online marketing and communication efforts as opposed to newspaper ads, flyers, and postcards. Although you may have a physical office at your brokerage firm or at home, don’t forget to take advantage of an online virtual office, too. This will allow you to interact with prospective Millennial home buyers online—whether through social media, email, or other means.
Some of the most effective options for targeting Millennial home buyers (and others) are shareable blog posts and short videos posted on YouTube and Vine. Many agents today are writing their own blogs and posting videos from their smartphones onto social media sites that can be seen worldwide. As more people “Like” their video tours of home listings or share them on Facebook, Twitter, LinkedIn, Pinterest, Google Plus, Tumblr, or Instagram, the potential growth rate of viewers is almost limitless.
To successfully reach Millennial home buyers, remember to focus your real estate advertising efforts toward this specific target market. Learn how and where to find Millennial real estate prospects online. Then make an effort to connect with them in meaningful ways. This will help ensure that you are top of mind when they’re ready to turn to an agent for help.
For more tips on how to connect with Millennial home buyers, take our new course—Millennials Are Changing Real Estate: Are You Ready? Plus, check out our previous post on The New Digital Real Estate Customer.