A Realtor's Guide to Understanding Millennials' Real Estate Needs

A Realtor’s Guide to Understanding Millennials’ Real Estate Needs

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The word ‘Millennial’ has endless connotations.

The generation has been described as lazy, yet disruptive; demanding, yet empathetic; enthusiastic, yet easily distracted… the list could go on forever.

Each industry takes its own spin on how to adapt their marketing efforts to capture the hearts and minds of millennials.

So, the common question arises: How should the Real Estate Industry respond to the new era of Millennial home buyers?

I have the answer.

Unlike in many other industries, the best way to understand the actions of Millennials is not through assessing their behavior – it’s through looking at the market they’re navigating.

Millennials seem to approach real estate from a surprisingly pragmatic point of view.

If we look at the environment they’re in, we can find out their priorities, their next steps, and what they need in a realtor.

Millennials Real Estate Endless Connotations

Understanding the Buyer

Millennials are Cautious

After the housing crisis of 2008, real estate is not something any Millennials take lightly.

It’s a house, after all – but for many Millennials, a house just isn’t financially feasible.

A report recently published through CNBC highlighted that 67% of millennials between 25 & 34 have less than $1,000 in their savings accounts…

… and 33% of millennials have nothing at all. [1]

So…millennials don’t have a lot tied up in savings.

No surprise here.

With hefty student loans lurking in their shadows, renting is the first and most obvious avenue for living accommodations. Many happily take this path as they flock towards the big cities….but the market is not as friendly as they’d like.

The CERA shows the average price of a rental property in Toronto at $739,082, while StatsCan shows the average income for someone 22-30 is only $935.75 a week. [2]

The window for savings is small – as the data shows, many young urban professionals get easily swept up in the fast-paced lifestyle of the city. For these individuals, saving becomes a distant dream, easily thrown into the self serving facade of ’30 is the new 20′.

But there are others…we’ll call them the customers.

These Millennials find themselves amidst the bottomless money sink of the city and quickly reevaluate their finances.

Discretionary income turns from buying bottles at the club to putting savings into their bank accounts. They navigate their early-mid twenties with caution and extreme prejudice. It’s the only way they can dream of saving for a down-payment.

So, we’ve established our home-buyers as cautious savers who are weary of the housing market and real estate financing options.

What would they want with a home?

Millennials are pragmatic

There are many smart, cautious millennials that don’t think twice about home ownership.

As an article published by the Atlantic aptly stated, there are a collection of career-oriented millennials who are very ok pushing the ‘pause’ button on mortgages & marriages as they move through their 20’s.[3]

But there are a collection of millennials in and amongst these high achievers with a different outlook.

With the rising housing market, rock-bottom interest rates, and a steady demand of renters, these millennials are viewing home ownership as a feasible and necessary investment.

After all, after a few years renting in a downtown core, it’s gotta be time to start making some money instead of watching it drain away down the renting machine.

Their home-buying process reflects the ruthless pragmatism they’ve been forced to adopt. With professional millennials grounded in a major city for work, investment properties are becoming the next best alternative to renting.

One such Millennial, Michael Lombardi (26), just closed the deal on his new home this past November – a triplex. Michael has moved into one unit and is finishing some small renovations before he rents out the other two spaces.

“In this city, having a room (or unit) to rent is the only way to manage the mortgage payments. Impossible to buy otherwise.”

Michael made note that he began to look at condos, but quickly abandoned any plans to live in the high rises or houses close to his work downtown due to the price tags attached to such units.

“I didn’t really care where it was.” Lombardi commented referring to the location of his investment property.

“Like, if it was in a location I wanted, that was just a bonus. I just needing something with the dimensions and location to transit that would attract reliable, long-term renters.”

Michael isn’t alone. Pragmatic millennials all over North America are recognizing rental properties as a feasible alternative to renting expensive properties in urban centers. [4]

Recent data even suggests an increase in Millennial homeownership outside of major urban areas to escape the price squeeze. [5]

So, Millennials are taking a pragmatic look at the real estate market, but…

… how are they getting the help they need to navigate the market?

Millennials are connected

These cautious, pragmatic young professionals who are interested in financing a home, rely on one resource more than anything else – their friends.

68% of real estate agents for Millennials come from a friend’s referral.

In the age of booming telecommunications, social media, and expanding professional networks, it’s an easy bet that someone they know has gone through the same home buying process before – or even better, someone else is going through the same experience right now.

If you haven’t had much contact with Millennial buyers, don’t let this figure be daunting.

It should be no surprise that the 2nd most popular way Millennials get connected with realtors is through online channels.

They’re already scouring the web for home buying tips, tax law, rental prices, etc. – all things they know little about but are ready to absorb and become experts in.

After all – these are our successful, yet cautious Millennials. They’re not going into this search without knowing absolutely everything they can… but there’s some things they don’t even know they need to know.

They are risk averse. They need someone to guide them through this process, ask the right questions, and provide all the info a seasoned home buyer would consider before making a purchase

In other words, they need a real estate expert.

That’s you.

Millennials Real Estate Endless Real Estate Expert

How to be the Ideal Realtor for Millennials

Share the Knowledge

Surprise, surprise.

Billboards, bus stop ads, big white smiles and tight suits don’t bring in the kids like they used too.

These Millennials don’t need someone that points them in the direction of the nearest coffee shop by their prospective home.

They need a seasoned real estate expert who can guide them through the finances behind their first investment property.

They need you to ask them the questions. [6]

How old is the roof? How old is the furnace? What kind is it? Does the house have knob and tube wiring?

Don’t be afraid to take their hand and walk them through the process.

Proceed with a calm confidence, not focused on getting the buy – only focused on providing the buyer with the best possible info they could need.

You’re not just their realtor in this relationship – you’re their mentor.

Millennials Real Estate Not Just Their Realtor

Many of these Millennials come into the buying process with a number in mind; however, many don’t have the experience and real estate savvy to look through a house and gauge how much work is going to be needed.

This is where a realtor can provide immense value during a showing, and lock down referrals for when your millennials home buyer’s friends ask him how he got his place.

For these young professionals looking for their first home, there’s another important quality they need from their realtor…

Be Available

It may seem like a no-brainer, but this cannot be understated as a key element of a successful relationship between a realtor and a buyer.

These Millennials are busy. Very busy.

Most are at a stage in their careers where they have demanding hours – they need someone who can reply to inquiries and set up showings when they’re available.

Weekends, evenings, etc. – all are on the table.

They need someone they can float new thoughts by quickly; someone who can recommend them to other sources of info on the plethora of real estate 101 questions they come across every day.

Be Online

As established earlier, these Millennials will flock to online resources to search for what they need to know before they fully dive into the home buying process.

Establishing yourself as a thought-leader online is a fantastic and crucial way to get exposure. Leveraging your social media reach to coincide with the Millennials search for real estate answers can get your name on top of mind for the Millennials choice of realtor.

If you want to improve your social media and reach more millennials, try PropertySpark for free: https://app.propertyspark.com/signup


Now you know what they need: practical advice on how to afford a house in the city, the options for renting, home buying best practices, what to look for in a viewing, etc.

So, understanding the Millennial buyer – a recap on what we’ve learned.

  • The Millennial home buyer is a cautious, pragmatic professional who is feeling the price squeeze of the city + looking for an affordable way to handle a mortgage. Investment properties and homes outside of major urban centers are the focus for new homes.
  • The Millennial will lean heavily on their social network to source a realtor and other info on real estate 101
  • Be their mentor – walk them through everything they would ever need to consider to make a wise investment in their first home
  • Be available – make sure you can accommodate requests and reply to input on prospective showings quickly.
  • It’s crucial to set an impression as an expert in assessing a home’s financial investment – this will boost your credibility to ensure you’re getting referrals to your home buyer’s network
  • Be online – have your online presence be genuine, while simultaneously publish content that will position yourself as a thought leader in the industry.

We hope this gets you on the right track to attract and build your Millennial client base!

Sources:

[1] http://www.cnbc.com/2016/11/23/heres-how-much-the-average-millennial-has-in-their-savings-account.html

[2]http://www.theglobeandmail.com/globe-investor/personal-finance/genymoney/millennials-flock-to-city-outskirts-in-search-of-affordable-housing/article30273404/

[3]http://www.theatlantic.com/business/archive/2016/08/millennials-the-mobile-and-the-stuck/497255/

[4] https://www.bloomberg.com/news/articles/2015-03-25/millennials-start-shift-to-homeownership-as-rents-soar

[5]http://www.theglobeandmail.com/globe-investor/personal-finance/genymoney/millennials-flock-to-city-outskirts-in-search-of-affordable-housing/article30273404/

[6] http://res.rethinkcrm.com/an-open-letter-from-millenials-to-real-estate/

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