If all the national surveys I read are on target, my 18-year-old college-bound twin sons will eventually move out of my house after all. Demographic experts say my kids are a lot more like their grandparents than mom and dad in terms of their spending habits and that they embrace thrift. This is all good news for home builders because this tech-savvy generation—numbering 80 million-plus and expected to be 50 percent of the workforce by 2020—is itching to buy houses.
Although millennials, who are aged 18 to 34, witnessed the housing boom and bust, they still perceive home ownership as a good investment. Much of their interest in home buying is fueled by ultra-low mortgage interest rates, rising rental costs, and possibly by concerns that they’ll never shed their college debt.
A recent survey by the PulteGroup, No. 2 on the Builder 100 list of the nation’s largest builders, shows that millennials who rent are highly interested in buying a home. Of millennials who earn more than $50,000, 65 percent of those surveyed reported that their intention to buy a home significantly increased during the past year.
The Pulte survey also revealed that the primary reason (52 percent) millennials wanted to purchase a home was to build equity. No. 2 (12 percent) was they were tired of apartment living.
House Trumps Marriage
Likewise, millennial couples are more likely to buy a house before they take their wedding vows, according to a recent Coldwell Banker Real Estate survey. Almost a quarter of married homeowners aged 18 to 34 bought a place together before they tied the knot, compared with 14 percent of those 45 and older (in other words, their parents), the survey reveals.
This is more good news for the home builders, especially because young people are waiting longer to marry. In 2012, the median age of men who married for the first time was 28.6 years, up from 26.1 in 1990. For women, the median marriage age was 26.6 years, up from 23.9 two decades ago.
Two-thirds of married couples now live together before they walk down the aisle, so buying a house together often is seen as a sign of commitment.
Another recent survey conducted by Trulia shows that of millennials surveyed, 72 percent said homeownership is part of their “American dream,” and 93 percent of young renters said that they plan to own. On the other hand, older renters said they were more likely never to buy.
Finally, young adults pared down the amount they owe on homes, cars, and credit cards during the recession, shedding debt almost four times faster than their elders, a recent Pew Research Center survey shows. College loans are an exception.
High-Tech Features a Must
Besides college debt, these stats play well for builders recovering from the worst housing recession on record—and who might be fretting that young adults will be living in their parents’ basements forever. But you can’t build the same house for millennials as you did for their moms and dads.
Millennials want value versus pizzazz, according to a recent survey conducted for Better Homes and Gardens Real Estate. Seventy-seven percent of those surveyed preferred an “essential” home versus a “luxury” model. Plus, 56 percent said technological capabilities are more important to them than curb appeal.
Almost two-thirds said they wouldn’t live in a home that wasn’t tech-friendly. In fact, 43 percent said they would turn their living room into a home theater with a big screen TV. Even in the kitchen, 59 percent noted they would rather have a television screen than a second oven.
So, instead of paying for my sons’ college education, maybe I should buy each of them a house on the other side of the country. They would have less debt, and I wouldn’t be tripping over shoes, backpacks, glasses, and dishes anymore.