As the largest generational group of homebuyers, Millennials are of great interest to real estate professionals. According to the National Association of REALTORS®, Millennials made up 38% of homebuyers in 2020. Compare this to 6% of the Silent Generation, 33% of Baby Boomers, and 23% of Gen Xers.
To best serve this large and growing market segment, real estate professionals are examining the relocation patterns, preferences, and values of Millennials. We want to know where Millennials are moving, what they’re looking for, and what their motivations are.
We will look at each of these ideas in this article. But first, a quick definition of the generations for clarity:
The Silent Generation: born between 1925 and 1945.
Baby Boomers: born between 1946 and 1964.
Gen X: born between 1965 and 1979.
Millennials: born between 1980 and 1998. Often split between Older Millennials who were born in the 80s and Younger Millennials who were born in the 90s
Gen Z: Born after 1998.
With the generations clearly defined, we can look at Millennial home buying patterns and how they compare to previous generations.
How Many Millennials Are Buying Homes?
While there was initially some concern that Millennials would be a generation of perpetual renters, it now appears as though Millennials were just waiting until later in life to buy homes. Just as Millennials delayed other milestones, like marriage and children, home buying appears to have been delayed due to financial constraints like student loan debt and the long-lasting impact of The Great Recession on income growth.
But Millennials are now reaching a point where they’re ready to buy. The Wall Street Journal cited First American Financial as projecting at least 15 million home sales throughout the 2020s. And COVID-19 has created more interest around homeownership for Millennials than for other generational groups.
Where Are Millennials Moving To?
The COVID-19 pandemic has added an interesting factor to Millennial’s relocation choices. With the work-from-home model now mainstream, proximity to the office is not nearly as important in 2021 as it was in the 2010s. This frees Millennials to look for homes in areas they wouldn’t have considered a short time ago.
For this reason, we’re seeing millennials flock to states with:
No state income tax.
A comparatively low cost of living.
Relatively good weather.
According to SmartAsset’s fourth annual study on Millennial relocation patterns, here are the top 10 states where Millennials are moving:
* No state income tax.
High cost-of-living states like Hawaii, California, New York, Oregon, and Massachusetts are conspicuously missing from the list. Poor-weather states, like those in the Midwest and Northeast, are also noticeably absent from the list.
What Do Millennials Look for in a Home (and How Does this Relate to Their Values)?
Here’s what Millennials are looking for in their homes according to the 2020 NAR Home Buyer and Seller Generational Trends:
Affordability: More than any other generation, Millennials value affordability (with 64% of Younger Millennials and 46% of Older Millennials rating affordability as important). This is likely due to student loan debt carried by Millennials and the fact that wages have not kept pace with cost-of-living expenses.
Suburbs and small towns: A higher-than-average percentage of Millennials purchased homes in suburbs and small towns. Not only are these areas more affordable than urban areas, but they also have lower population density, which is proving important in the COVID-era.
Manageable size. While Gen X is purchasing 2,000 square foot homes, Younger Millennials are purchasing 1,600 square foot homes. This could be an affordability factor, but could also be an indicator of a preference for a minimalist lifestyle.
“Millennial buyers, more than any other age group, are looking for community," said an agent from Century 21 Home in Chino Hills, California. "They’re interested in the family-friendly gated communities that are being developed in suburban areas.”
It stands to reason that Millennial buyers are looking for family-friendly communities since they are the most common age group to be having children.
How Millennials Are Finding Their New Homes
It’s no surprise that Millennials are more likely than other generations to use the Internet for their home search. A full 98% of Older Millennials are using websites to search for homes. Millennials are also more likely than other generations to use a real estate agent to purchase their home. An impressive 92% of buyers are working with real estate agents.
If you’re interested in helping Millennials find their new home, you can get licensed as a real estate agent in as little as a few months. AceableAgent offers innovative, affordable online real estate courses in some of the most popular states for Millennial buyers.