Buying a house: What millennial homebuyers want

By Amy Fontinelle
Amy Fontinelle is a personal finance writer focusing on budgeting, credit cards, mortgages, real estate, investing, and other topics.
Posted on Jan 12, 2018

When you think about millennials and what their ideal living situation might be, what comes to mind? An urban loft in a former shoe factory with floor-to-ceiling windows offering a view of the downtown skyline, all within walking distance of the city’s trendiest bars and restaurants? A pricey Silicon Valley apartment with plenty of roommates to share the rent so everyone can afford to work on their start-up company? These living arrangements might be appealing to some millennials, but when it comes to buying a home, this group’s tastes are more conservative than you might think.

Millennials — defined as those born from 1980 through 1995 — mostly want single-family homes in the suburbs, according to the 2017 National Association of Realtors® Home Buyer and Seller Generational Trends study , which covers the period from July 2015 through June 2016.1 Only 15 percent of millennial homebuyers surveyed purchased property in urban or downtown areas, while 57 percent purchased homes in the suburbs.

That’s likely because the median age of a millennial homebuyer is about 30, a typical age for settling down and having kids, said NAR chief economist Lawrence Yun in a prior year press release .2

Indeed, the survey found roughly two-thirds of millennial buyers are married and 49 percent have at least one child. “With more kids in tow, the need for more space at an affordable price is increasingly pushing millennial buyers outside the city,” the survey found.

Millennials are similar to other generations in wanting a suburban home. But because they prioritize proximity to their jobs and affordability, they tend to purchase older homes that may need work. (Related: Millennials and retirement prep )

Indeed, homes that are older homes are less expensive for first-time homebuyers. Millennials paid a median price of $205,000, up from $187,400 the prior year for a 1,800 square foot home with three bedrooms and two bathrooms, according to the NAR survey. That compares with a median purchase price of $227,000 for homebuyers across all age groups.

There’s nothing hip about the places where millennials are buying, either. According to a study by CoreLogic , a real estate data and analytics company, millennials want to buy in locations where homes are affordable and jobs are plentiful.3 The top three housing markets for this group are Utah County, Utah; Denver County, Colorado; and Kent County, Michigan. The top markets for millennial homebuyers tend to be in the middle of the country, where homes are generally more affordable. The least popular markets are some of the most expensive: Marin County, California; Westchester County, New York; and Honolulu, Hawaii.

Millennials are trendier when it comes to their home decor preferences, which include items such as reclaimed wood, brightly colored LED light accents, and smart home technology, but they also like traditional elements such as natural stone and handmade arts and crafts, according to a Washington Post article by Michele Lerner.4

They’re also interested in energy efficiency, comfortable and functional kitchens, outdoor living rooms, home offices, and home organization features, according to remarks from the National Association of Home Builders and Better Homes and Gardens at a January homebuilding show.5

In addition, the NAR survey found that millennials are a transient bunch. For buyers 36 and younger, the expected length of time they intend to remain in their home is 10 years, compared with 20 years for buyers aged 52 to 61 – that is if a job opportunity or the addition of another child doesn’t force them to sell sooner. 6

More information:

When student loan and 401(k) compete

Saving money and staying safe when shopping for a loan

Cancer and young adults: Financial challenges

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National Association of Realtors, “Home Buyer and Seller Generational Trends Report 2017,” 2016.

National Association of Realtors, “NAR Generational Survey: Millennials Increasingly Buying in Suburban Areas,” news release, 2016.

Bret Fortenberry, Corelogic, “Deciphering the Code of the Millennials – Part I. Where millennials are buying homes,” CoreLogic, 2016.

Michele Lerner, “What millennials want in home design — wood, stone and purple rain,” Washington Post, March 2016.

National Association of Home Builders, “Millennials to Shape Housing Preferences – Once They Start Buying,” January 2016.
 

The information provided is not written or intended as specific tax or legal advice. MassMutual, its employees and representatives are not authorized to give tax or legal advice. You are encouraged to seek advice from your own tax or legal counsel. Opinions expressed by those interviewed are their own, and do not necessarily represent the views of Massachusetts Mutual Life Insurance Company.