Millennials are increasingly flooding the home buying market, leaving many builders and Realtors unsure of how to target this new group of consumers. At a recent International Builders’ Show (IBS) press conference on Millennials’ home trends and preferences, panelists revealed that Millennials are largely focused on finding smaller homes that are equipped with innovative technology.
According to NAHB Assistant Vice President of Research Rose Quint, the rising number of first-time home buyers will cause the size of homes to decrease in 2015. As newer and younger buyers require smaller, more affordable homes, builders will adapt to the demands of the new generation. While three million new jobs were created in 2014 – the largest amount since 1999 – home prices have only experienced moderate growth. In addition, regulators have reduced down payment requirements for first-time buyers from 5 percent to 3 percent.
In a recent survey, home builders were asked what features they would likely include in a typical home this year. The top features included a master bedroom, walk-in closet and separate laundry room, while other popular features involved energy-efficient amenities such as low-E windows, Energy Star-rated appliances and windows, and programmable thermostats.
In another survey, Millennials were asked what features would most likely affect their decision to buy a home. At the top of the list was a separate laundry room, with 55 percent of respondents indicating that they would not purchase a home without one. Storage was also rated to be highly important, particularly for linen closets, a walk-in pantry and garage storage. Like the home builders’ survey, energy efficiency was one of the most important features, and most Millennials indicated that they would pay 2 to 3 percent more for energy-efficient homes provided that they can save money on their power bills. While several respondents indicated that they would be willing to sacrifice extra space or live farther away from work, the survey revealed that Millennials are unwilling to compromise when it comes to low-quality materials in their homes.
As for the types of homes preferred by Millennials, 75 percent prefer to live in single-family homes and 66 percent prefer to live in the suburbs. While Millennials are more likely to live downtown than older generations, only 10 percent say they want to live in the central city. Instead of focusing on the urban city life, one of the biggest home buying trends of this generation is the emphasis on outdoor living. Millennials increasingly prefer less expensive, minimalist choices for their home renovation projects, such as strings of garden lights, brightly painted doors or furniture, and low-maintenance landscaping like large patios and succulent plants.
Another prevailing trend in Millennial home-buying is the seamless use of technology. This generation implements technology at work, at home and on the go, switching from smartphones to tablets to laptops throughout the day. Apps and programs that can control heating, air conditioning, security, lighting and multiple electronic devices are increasingly useful for Millennials who want to control their lives from the palm of their hands.
As more Millennials enter the home-buying market, builders will have to adapt their designs to suit the new generation.