Much has been made about the vaunted power of the Millennials to shape home sales in the coming years. These adults, born between the 1982 and 2003, will wield tremendous influence and comprise roughly 36 of the U.S. population by 2020 (77 million people). Much of what sociologists report about Millennials centers on the many ways they’re different from Boomers or Gen Xers, such as being more civic minded, collaborative and technologically savvy. And while marketers often focus on their differences compared to other generations, truly understanding this customer segment is about seeing both the similarities to and differences from other generations.
Morley Winograd (at right) and Mike Hais are authors and experts on Millennials and have written three books that address the significance of the group in shaping the future of America. Winograd spoke recently to members of the insulation industry to address how the millennial generation will makeover America’s homes. He delivered insights on five key ways millennials are similar to earlier generations.
- Home Ownership: Their American Dream, Too
Despite their slow entry into the home buying market (and slow exit from their parent’s homes), Millennials still consider home ownership the quintessential American dream, consistent with each generation before them. “They see value in purchasing a home and recognize that ownership is one of the keys to building wealth long-term,” Winograd said. Overall, more than half of millennials place a high priority on home ownership.[1] Further, as the Millennial Generation grows up, it’s becoming more traditional in its buying habits, increasingly preferring single-family detached homes (62 percent compared with 65 percent for all buyers).[2]
- It’s More about Value Than “Bling”
Like the Greatest Generation or the “GI” Generation (born between 1901 and 1927), Millennials are also wary of getting in over their heads financially. “They felt the impact of the Great Recession most dramatically – their comfortable childhood was yanked out from under them as their parents lost jobs, homes and savings and as a result, they are the most careful spenders in the country, much like the GI Generation, whose experience growing up in the Great Depression made them single-minded savers for their entire lifetime,” Winograd added.
“Although they want things like open floor plans, they aren’t interested in things that cost money just for the sake of showing off and as a result, they are more likely to ask questions about the insides of a house – its insulation, plumbing, and HVAC.”
- Environmentally and Efficiency Minded
Much has been made of how environmental conscious Millennials are. Winograd confirms this, saying “They are the most environmentally conscious generation in our country. ”They will be interested in anything that reduces a home’s footprint on the environment, especially if it is measurable and works automatically.” Among the most desirable efficiency items, Winograd says are an energy efficient washer and dryer (preferred by 57 percent) and smart thermostats (44 percent). However, the data suggest a high level of parity with other generations. With 85 percent of consumers overall prioritizing energy efficiency[3], compared to 84 percent for Millennials -- according to the National Association for Home Builders.
- Distrust Financiers
Just as the GI Generation’s perception of banks deteriorated during the Great Depression, Millennials have a similarly pessimistic view of financiers. They view bankers and other financial institutions very negatively, Winograd notes. “Builders must keep the mortgage lenders and bankers away from the sales process and should instead act as the ones negotiating those things for the Millennial buyer, not as an ally of the financiers,” he said. “The financing process should be transparent, quick and as much as possible, absent the bureaucracy of the traditional mortgage process – similar to the now ubiquitous ‘rocket mortgage’ where at the push of a button, buyers can get approved for a mortgage.
While finances ultimately factor into the purchase decisions made by all generational groups, it’s the millennial archetype that weighs finances most heavily, as they are burdened with student loan debt, comparatively lower wages and little savings. Thus, monetary considerations are factored into every aspect of their home purchase decision. “Ultimately, the largest single influencer on the millennial home-buying decision is affordability. Their aversion to risk, especially in financial matters is the single most striking thing about this generation in comparison to others. Thus, builders must find ways for Millennials to see that they can live the American Dream affordably,” Winograd says.
- Connecting Web + Social
All generational groups typically start their home search on the web, and this is no different for millennials, with 40 percent of these buyers starting online.[4] However, Millennials are the most technologically savvy of all buyers, which means that in addition to the builder’s website, they’re also spending time on social sites and expect marketers to have a presence on platforms like Snapchat. “Builders need to get comfortable trying a number of different marketing approaches for Millennials and see what works, rather than doing what they are comfortable doings,” Winograd advised. “Create Snapchat videos of the house and publish new ones every day with a whimsical filter to attract interest.” Winograd also encourages builders to have Millennials share opinions of their buying experience on online review sites like Yelp .
While this is a good Millennial strategy, recent data suggest it could be equally relevant for Gen Xers as well. New Nielsen research finds that Gen X, adults aged 35 to 49, use social media more heavily than millennials, spending 6 hours and 58 minutes a week on social media compared to Millennials’ at 6 hours and 19 minutes, as reported by the New York Times.
Intergenerational Insights
While Millennials make up the largest percentage of home buyers (30 percent), other cohorts comprise a sizeable share of the market as well, according to the National Association of Realtors® 2017 Home Buyer and Seller Generational Trends Report. Boomers represent 30 percent of the home buyer market while Gen Xers, who have the highest average household incomes among the generations at $106,000, comprise 28 percent. Finally, the Silent Generation accounts for 8 percent of sales.[5]
Given the market share impact of other generational groups, builders should ensure that marketing materials and activities will appeal to the broadest segment of potential buyers, while respecting those items that do make Millennials unique.
[1] http://rismedia.com/2015/06/14/millennials-are-rays-of-sunshine-amid-clouds-of-pessimism/#close
[2] https://www.nar.realtor/reports/home-buyer-and-seller-generational-trends
[3] The Shelton Group, Energy Pulse Study (2016)
[4] National Association of Realtors 2017 Home Buyer and Seller Generational Trends
[5] 2017 National Association of Realtors Home Buyer and Seller Generational Trends Report
