(cover photo of smartphone courtesy of Flickr/Startup Stock Photos)
There’s a new group of home buyers who have been hitting the real estate market in the past few years - millennials. Now, in 2016, this year they won’t be ignored - here on Cape Ann and across the country. According to Zillow’s predictions, millennials will overtake baby boomers as the generation purchasing the largest number of homes this year.
Millennials are those born between 1980 and 1995 - those who came of age around the time of the new millennium. That’s a category I fall into - being born in 1983. And, like many other millennials, I will hopefully be entering the first time buyers’ market in 2016.
Previously, millennials like myself were assumed to be perennial renters who weren’t as eager to jump into homeownership after solidifying their entrance into the workforce like previous generations had. This opinion was mostly formed by market forecasters in the wake of the economic crash of 2009 and subsequent housing market decline, where millennials were often graduating with a lot of student loan debt and trying to break into a difficult job market - making it difficult to balance a budget, nevermind save the money necessary for a down payment.
However, times have changed. For instance, last year, Realtor.com’s chief economist Jonathan Smoke explained his 2015 annual forecast in a HousingWire article. “The story about millennials not forming households and getting into homebuying is more of a 2012 and early 2013 story,” he stated in the article. “It’s outdated. Our view of 2015 is informed by strong trends and indicators of what’s happening today with millennials." And that prediction came true, Millennials have started making major inroads to purchasing their own housing this past year. The real estate portal Zillow predicts that millennials will overtake baby boomers as the generation purchasing the largest number of homes this year, making their preferences even more important.
(photo courtesy of Realtor.com)
Millennials are officially taking over. Their preferences - different from previous generations - will spur changes in the way homes are bought and sold. But what does this mean for the overall market? And how will it affect Cape Ann?
It’s not a surprise that millennials are attached to technology - they spend an average of 35 hours per week with digital media, which is nearly twice as much as non millennials, according to a report from the group Cultural Outreach Solutions. As a social media manager, I spend a lot of time on my phone and laptop - and tend to do a lot of research on my own. For instance, I have booked entire vacation packages without an agent, applied for college, and much more.
In the past few years, many of my friends have posted their new home purchases to facebook after their offers were accepted or closing dates. Still more of them post houses they’re either interested in, or live close to, to share with their social circle in case anyone is interested - word of mouth, for a new age. Patty Knaggs has had great success working with millennials, and knows how the digital revolution has worked.“"Millennial buyers are probably the best informed of all buyer groups due to their savvy use of the internet. They are digital natives! If it is public information - Millennials are likely to know it".
Most millennials have similar experiences to mine. According to data from the National Association of Realtors, more than half of millennials search for homes on their phones and, among those, 26 percent end up buying a home from a phone search. This means that agents have to adapt to a client base whose needs are rapidly changing - from phone calls and in-person meetings to texts and emails. Patty continues, “When marketing online I rely on video (both professional and my own), professional photographs and various media outlets such as Facebook or Instagram. Millennials don’t like to be ‘sold’, they like to be ‘shown.’”
This doesn’t mean agents aren’t necessary - it’s still very necessary to have an agent to walk buyers through the process and help with the paperwork. Millennial home buyers trust that a licensed realtor can handle the difficult negotiations and issues that may arise. “The value of an agent to a millennial buyer is most likely explaining and guiding the buyer through the process. Home buying begins as a yearning for independence and freedom, yet involves one’s greatest financial and time commitment of a lifetime. An agent’s market knowledge can help a buyer compare a chosen home to others that the buyer may not have had the opportunity to view or experience. Agents provide an experienced segway from the knowledge learned on the internet to executing a purchase with all the nuances of home inspections to finding a competent lender,” says Patty.
Not only are the methods of communication changing, but what millennials are looking for in a home will also have a big impact on the 2016 market - not only across the country, but here on Cape Ann and the North Shore as well.
Fortunately, Cape Ann has a lot of the amenities and housing stock that many millennials are looking for. While Baby Boomers, and even Generation X, searched for spread out suburban home on large plots of land, accessible only by cars, this generation is searching for a more urban feel. Walkability is key - and proximity to the MBTA commuter rail to Boston is a huge selling point to get younger buyers excited about Gloucester and Rockport. Smaller homes on smaller lots that are closer to downtown’s shops and restaurants will be one of the major types of housing stock that millennials in Gloucester will be looking for in 2016 - myself included.
Millennials won’t discount condos, either, if the price is right - they’re savvy buyers, looking for an investment. They have done plenty of research on which types of homes will increase in value. Many, like me, romanticize the buying and home ownership process, and are willing to put an offer on a diamond in the rough - a home they can put sweat equity into, and add their own creative touch at the same time. Other millennials are looking for homes or condos that are ready to move into without much work at all - especially those who have purchased before and are now upgrading because of a job promotion or expanded family.
If you’re looking to sell and your home doesn’t fit this criteria - don’t fear. Older millennials won’t pass up a great opportunity - especially with rustic or historic homes, like Victorians.