Millennials are adulting. They have reached the age where they are buying homes and making a huge impact on the housing market. It has been estimated that they make up almost half of the home buyers today. Recognizing that older homes often need renovations, repairs, and have higher monthly expenditures, millennials are turning the key to newly built homes.
As a substantial proportion of the population buying newly constructed homes and integrating resort-style living into their homes, Millennials are setting home trends. William Olson, senior vice president and division manager for Estrella by Newland, says that he has seen a surge in smart home concepts.
“Millennials want everything from their refrigerator to the lights to be integrated and wirelessly connected,” Olson said. “We’ve also seen our builders within Estrella getting requests for energy-efficient features that help reduce both their carbon footprint and energy bills each month.”
These features can include high-quality insulation, doors and windows, energy-efficient appliances, and HVAC systems. Even though a high-tech energy-efficient home sounds costly, millennials also need it to be affordable.
Olson adds, “They achieve this by compromising on size as they are ok with a smaller footprint home – as long as they’re functional.”
They want open concept homes with an office and plenty of room for flex space that can be a gym one day and a craft room the next. But indoor space isn’t the only focus; they also want an outdoor area. Being able to entertain, sit by the firepit or enjoy a glass of wine outside is a feature near the top of their list, and even higher is easy accessibility.
“They want to blur the line between the indoor and outdoor space so large glass patio doors that can slide or fold away really open the home and make it seem larger,” Olson said.
To afford these homes packed with amenities, millennials are taking advantage of the near historic low mortgage rates. “Even though the prices of homes are up about 25%, millennials are wisely capitalizing on rates that have been around 3%,” said Mike Berte, President of AmeriSave Mortgage Corporation.
Once deterred by debt and a downpayment, millennials are finally in the financial position to purchase a home. After college, known as the boomerang generation, millennials went back to their family home and lived with their parents to save and pay off student debt. Spending time at home, reducing debt, and saving money has allowed millennials to qualify for loans and make a downpayment.
“Some millennials were deterred by their savings account balance because they thought they had to put down a 20% down payment,” Berte said. “While that is ideal, it isn’t a deal-breaker. There’s other options to the home buying process that will allow them to close the deal.”
Some put down as little as 10%, and while this will result in a higher Private Mortgage Insurance (PMI) rate, it also allows millennials to start building equity. To get in this equity-building game, the days of going to a bank to qualify for a loan are long gone; now, millennials are doing so online. With AmeriSave’s Lock and Shop option, home buyers have the opportunity to shop around for their home with peace of mind of not only knowing what they can afford, but also the freedom to focus on finding their dream home without worrying about a fluctuating rate.
Additionally, in today’s market, many young home buyers are losing deals because of other cash offers. Although they may not have cash to give, there are other options they can take advantage of to attract sellers, one being a certified pre-approval letter. Being known as the second best thing to a cash offer, it provides buyers a competitive advantage over other buyers.
Overall, technology has simplified the mortgage process and professionals are able to pass along additional savings to their customers. It’s on-demand capabilities allows millennials to get started on a path to owning their first home at a low mortgage rate with a few clicks. After millennials have qualified for a loan, this tech-savvy generation isn’t taking the traditional route to home shopping; instead, they are researching options online.
After millennials have qualified for a loan, this tech-savvy generation isn’t taking the traditional route to home shopping; instead, they are researching options online.
Brandon LaVallee, Get Your Nest founder and COO, said “millennials are accustomed to using an app for everything from hailing a cab to ordering food; why would home buying be any different?”
But they’re not just researching neighborhoods and looking at kitchen pictures; millennials will even purchase a home online. According to LaVallee, with all the data at their fingertips and our technology to help them along the way, millennials are armed and ready to move quickly once they find a home they want to offer on. We make that process as fast as humanly possible, which also gives them an edge.
“The real estate market has a low supply of homes, and with demand at an all-time high, it makes for a very competitive market. Traditional house hunting was frustrating, touring homes only to lose to a higher bid,” LaVallee said.
Now online, millennials can make offers faster and get ahead of the other home buyers in the market–all with a push of a couple buttons.