Millennials: The Next Wave of Home Buyers
"Millennials are just now entering their 'prime home buying' years between the ages of 25 and 45," says Avery. "As a result, our offices are starting to see increased activity from younger buyers, many of whom are looking to buy their first home."
In 2015, millennials surpassed Baby Boomers as the largest U.S. population group. Roughly 80 million strong, they have a buying power of more than $600 billion annually. While they comprise 24.7 percent of the population nationally, their market share is even higher in the Greater Washington, DC area. They account for 33 percent of the population in DC, and 27.4 percent and 27 percent respectively in Virginia and Maryland."
"This is too large of a market to ignore," says Avery. "This is why we've been working to make sure our agents are trained to understand the unique needs of the millennial home buyer."
Some of the major challenges millennial buyers face are finding a home they can afford, coming up with a down payment, and fully understanding the home buying process.
"When working with first-time buyers today, the number one thing is education," says Nina Chen-Landes, an AveryHess agent based in Tysons Corner, Virginia. "Although many of these buyers start off doing a lot of online research, they can't Google search their way to home ownership. They like to engage a professional who helps evaluate their situation, go through the buying process one step at a time and show them properties they can afford. There is no substitute for person-to-person service".
This was the case with Erin Kelly and Cory Donohue, who recently purchased their first condo in Washington, DC. Both 32, Kelly is a nonprofit professional and Donohue is a public school teacher.
"We were looking to make an investment in property in an up and coming neighborhood, and were sick of sinking our money into rent," says Erin. "We were able to buy a condo that would allow us to make a smart investment."
Foregoing online research, the young couple went directly to a real estate professional. "I literally knew nothing about real estate, and didn't have the confidence to go it alone," says Erin. "We met with our agent, Katja, and talked about the ins and outs of buying – from PMI, to monthly payments, to HoA, to mortgage officers to making an offer. We felt confident that she would have our best interests at heart, and be the best advocate for us."
One of the major challenges they encountered was competition. "DC is such a competitive market and we had to make a quick decision upon seeing a place whether or not we wanted it," Erin says. "Buyers would come in with 30% down payment to our 10%, or all-cash. We lost out on a lot of great places because of that."
Working with their agent, Erin and Cory were ultimately able to successfully find and purchase their first home. "It was an awesome decision," says Erin. "We will probably keep it for a few more years, then sell and upgrade to a different place."
Data from the averyhess.com website reflects a higher engagement among millennial consumers. Highlights include:
• Majority of visitors are ages 25-34 followed by ages 35-44
• 60 percent female
• 50.4 percent access the site via mobile, 42.5 percent via desktop and 7 percent via tablet
• Strong correlation to key affinity interests such as lifestyle, commutes, hobbies, food/dining and shopping
• All social media generated traffic comes through the AveryHess Facebook page
Millennials have been referred to as the first generation of "digital natives," who do everything from shopping to socializing via the internet or their smartphones. While they do continue to defy convention in many ways, Avery believes they also have many things in common with the buyers who have preceded them.
"Like the Baby Boomer generation and Generation Xers before them, millennials are entering that 'golden chapter' in their lives where they've begun advancing in their careers, earning more income, and starting families," he says. "So quite naturally, their next step is to invest in a first home."
Last year, millennials accounted for 34 percent of all home buyers and 66 percent of first-time buyers. Based on industry trends, those numbers are expected to continue to grow in the coming years.
Founded in 1992, AveryHess, Realtors® is an independent real estate brokerage that operates in eight offices serving Washington DC, Maryland, and Virginia. With more than 180 agents, the company is committed to providing the best services, market knowledge, technology, and decision support to its clients Every Step of the Way.
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