July 9, 2021
Millennials were born between 1981 and 1998. So, in 2021 they'd be 23 to 40. The mid-20s to 40s are prime time for many to start a family and buy their first home. Although there are years of difference between millennials and baby boomers, it's surprising how some trends stay the same. Read on to discover what this newest home buying group is looking for.
Big City Condos & Town Homes
Young tech professionals live in cities like Austin, Dallas, San Jose, San Francisco, Seattle, Raleigh, Arlington, Boston, San Diego, Washington, and Atlanta. Many prefer condos or townhomes. They're looking to live in a walkable community close to everything. Since they work hard and often long hours, they want convenience. Young professionals want to be able to come home and walk somewhere close to meet their friends for a beer.
For example, in San Jose, new single-family homes are unaffordable except for the very top income earners. Instead, these young tech professionals prefer new condos that are low maintenance and centrally located. Condo communities close to shopping, dining, and convenient freeways are their top choice.
But now that many can work remotely, they may choose less expensive areas outside of the city. A software engineer may move from the San Jose Bay area and buy a home in the suburbs of Portland for a fraction of the price.
Although many single professionals prefer condos and townhomes, those with kids want a single-family home and are willing to relocate if they need to.
Look back over the last 75+ years since WWII. Families had the dream of homeownership. And that was the original purpose of the FHA. To loan money to returning veterans and their families at an affordable rate. Today many first-time homebuyers are taking advantage of the FHA mortgage with its low-down payment and more lenient guidelines. FHA and VA loans are two of the most popular millennial home lending products.
What remains constant is that the single-family home in the burbs is on the top of the list. Young professionals formerly living in the big city are heading for small towns. They long for more space and peace and quiet. Like many other home shoppers, they're looking for a three-bedroom, two-bath home.
Sometimes the search for an affordable home that's big enough means a move to a small town in another state. There are small towns across the country with homes under the U.S. median value of $340,000. Homebuyers are checking out towns in New England, Colorado, Northern California, and South Carolina.
Millennial homeownership can be challenging. And just getting your foot in the door can sometimes be overwhelming. That's why millennials are interested in buying fixer-uppers. Sometimes they've looked for months before they consider a fixer. Other times, they're starting out looking for a fixer because they're willing to put in some elbow grease and are hoping they'll find more properties in their price range. Those lucky enough to have family and friends around are able to get help in their renovations.
On the other hand, die-hard city dwellers are buying condos and townhomes. Even if they're a small, one bedroom and one bath unit — they consider buying better than renting. In walkable cities like Philly, Newark, Miami, and Chicago, there are starter condos and townhomes close to everything millennials need, including grocery stores, shopping, dining, coffee shops, pubs, and entertainment.
So, a small starter isn't always a single-family home. It's whatever the borrower can afford. With remote work becoming more the norm, many living in high-cost cities have decided to relocate to more affordable big cities.
Some millennials are opting for tiny homes, often on the property their family already owns. Living small has its advantages, and that includes affordability.
Million Dollar Starters
What about successful young entrepreneurs and highly paid tech professionals? Often, they skip the starter home and go for the million-dollar mansion. Or if they live in high-cost areas like Silicon Valley, they'll get a smaller single-family home that still costs a million dollars. In high-tech cities, some builders cater to the tech professional with custom-built millennial homes with the latest in smart home features.
Millionaire millennials often want what their parents had — a nice home in a good area that they can raise their kids in. Yes, it might be more luxurious, but the purpose is the same. Raise a family in a nice neighborhood.
No matter where millennials are buying homes, some things never change. They still have the dream of homeownership, just like their parents and grandparents before them.