There are myriad stereotypes in the zeitgeist about millennials — those between 18 and 34 — and their attitudes toward real estate. Some believe they don’t want to purchase homes or don’t want homeownership badly enough to make the sacrifices necessary to save up the funds.
While others may realize that these beliefs aren’t quite right, the extent to which they’re wrong may be surprising.
Real estate behemoth Zillow Group challenges those stereotypes in its first annual report on consumer housing trends, which the company says is the largest-ever survey of U.S. homebuyers, homesellers, owners and renters.
How do millennials feel about agents?
The 167-page report also shed light on this question.
Screen shot from Zillow Group’s Consumer Housing Trends report
Seventy-five percent of buyers hire a real estate agent during the buying process, according to the report. Though the majority of millennial buyers use an agent, they are the least likely to do so among the generations.
“The older the buyer, the more likely that buyer is using an agent,” the report said.
“Baby boomers [aged 50 to 64] and the Silent Generation [aged 65 to 75] rely most heavily on an agent or broker for real estate guidance, with 83 percent and 81 percent respectively citing them as a resource in their home search. Seventy-four percent of Generation X buyers [aged 35 to 49] report using an agent, followed by 70 percent of millennials.”
Nonetheless, millennials are more likely to stay in touch with their agent (40 percent do) and more likely to recommend their agent to others (55 percent do) compared to older generations.
“Millennials are extremely loyal to their agents and expect their agent to be a strategic partner in the process. If you are successful with these clients, you may have a client for life,” Zillow Group spokeswoman Amanda Woolley told Inman via email.
Millennial sellers are just as likely to use an agent as older generations (88 percent do), though they are more likely to use online resources as well, according to the report.
Millennials are more likely to consider more than one agent than their older counterparts and more likely to find their agent online. A third of all buyers find an agent through a personal referral, but more than a quarter (26 percent) are finding their agent online.
That latter figure goes up to 29 percent and 27 percent for millennial and Generation X buyers, respectively.
A picture of the typical homebuyer
Other highlights from the report:
- The typical homebuyer is in his or her mid-to-late 30s or early 40s, married (67 percent), college-educated (75 percent) and in search of a single-family home (83 percent). Buyers have a median annual household income of $87,500.
- Millennial homebuyers are more diverse than their forebears. Three-quarters are Caucasian, 11 percent are Hispanic or Latino, 7 percent are black or African-American and 5 percent are Asian or Pacific Islander.
- 52 percent of buyers weigh renting at the same time as they’re shopping for a home
- 87 percent of buyers use an online resource at some point during their home search
- Millennial homebuyers seek input on their home search from friends, relatives and neighbors 58 percent of the time, compared to 37 percent for the Silent Generation.
- Millennial homebuyers wait longer to buy a first home than previous generations. The modern-day “starter home” is nearly as large as the median home for “move-up” buyers, and costs about 18 percent less.
- 46 percent of buyers got the first home on which they made an offer
- Over half of buyers (56 percent) save up for a down payment by setting aside a little money at a time. Almost a third (32 percent) use more than one source for their down payment, including gifts and loans from family, selling stocks and bonds, and cashing in retirement savings.
“Young home buyers and sellers share their parents’ and grandparents’ romantic notions about homeownership, and we’re seeing their homebuying dreams come true in the data,” said Jeremy Wacksman, Zillow Group chief marketing officer, in a statement.
“These savvy consumers are doing things differently: they juggle shopping for homes to buy and rent at the same time, and they bring deep research and their vast social networks to the process.”
About the survey
More than 13,000 U.S. residents aged 18 to 75 responded to a 160-question online survey from independent market research firm Lieberman Research Worldwide between April 27 and May 12, 2016.
Respondents break down to 3,003 buyers, 3,003 sellers, 3,082 homeowners, 3,000 renters and 1,161 long-term renters.
The survey was “blinded,” meaning the respondents did not know Zillow Group was its sponsor. Both Zillow Group and Lieberman Research designed the survey, analyzed the results and created the report.
“We are using key learnings from the data to help better understand homebuyers and sellers and their relationship with real estate professionals, which will ultimately inform and improve our products,” Woolley said.
“Zillow Group has always used research to stay at the forefront of consumer behavior. For example, we spotted early that home shoppers were using mobile, and invested in apps and mobile web. Now those are a bigger part of our business than our desktop site.”
In this study, Zillow Group found that millennials not only want to be homeowners, but are putting their money where their mouth is: half of all buyers in the U.S. are under age 36, and 47 percent of buyers are first-time buyers.
“We knew the millennial generation was playing an increasingly large role in the housing market,” said Zillow Chief Economist Dr. Svenja Gudell in a statement.
“But this consumer research allows us to get a fascinating, behind-the-scenes look at how their expectations and approach are playing out in the housing market.
“These young adults came of age during a recession, but they are buying their first homes in a high-priced and fast-paced market. They’re using every available resource, including online research and real estate professionals, and taking on the challenge with gusto.”
In future articles, Inman will further explore the results of Zillow Group’s survey, including insights into buyers, sellers, millennials and renters.
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