The 83 million U.S. Millennials don’t want to be pigeonholed. That, and the fact that Millennials range in age from 17 to 37, means researchers looking for generational trends face a tough task.
Nonetheless, Ali Wolf, manager of housing economics for Meyers Research, based in Costa Mesa, Calif., and Cassandra Cherry, director of marketing for Danielian Associates, an architecture and planning firm based in Irvine, Calif., both Millennials themselves, presented their research to homebuilding industry representatives at the 2018 International Builders Show in January in Orlando.
“The spectrum of Millennials includes people with high incomes and low incomes and everything in between,” said Wolf. “Millennials are the most highly educated generation and also the most diverse, with 43 percent identifying as non-white.”
When it comes to home, one trait that unites most Millennials is the desire for flexibility in their floor plan and lifestyle, said Wolf.
Delayed Gratification for Homeownership
The well-documented drop in homeownership rates in recent years led to speculation that perhaps Millennials want to be a generation of renters. Cherry and Wolf found that just six percent of Millennials say they never want to a buy a home.
“The bigger culprit in the decline of homeownership is that wages have grown just 10 percent, while home prices have gone up 40 percent over the past decade,” said Wolf. “In addition, prices in the past year rose 9 percent for properties in the bottom tier compared to four percent for properties in the top price range.”
The No. 1 reason Millennials say they have yet to buy a home is affordability (21 percent) and the second reason is the lack of a down payment (16 percent).
Wolf said builders should anticipate an influx of Millennial buyers in the next few years, as the largest segment of that generation, now 27, 28 and 29, hit their prime buying years. More than 50 percent of all Millennials surveyed said they plan to buy a home within the next five years.
One way many Millennials are saving for a home purchase or buying a home now is with roommates. Millennials are more likely to live with other people for affordability reasons than previous generations, said Wolf.
“Designing homes to accommodate this lifestyle can make them more appealing to Millennials,” said Cherry. “For example, a young buyer can purchase a house with space for a tenant and have the tenants cover the mortgage. NextGen suites or accessory dwelling units with a separate entrance, a one-car garage and private outdoor space are a great way to help Millennials afford a house, not just meant for multigeneration households.”
Traditionalists and Trailblazers
While the size and style of desired properties varies, single-family houses are the most popular among all age groups, including Millennials. Unfortunately, single-family houses are unaffordable for median-income Millennials in numerous markets, such as Los Angeles, Denver and Salt Lake City.
Cherry said many buyers are willing to give up a garage to afford a single-family home.
“Among Millennials who own a home now, 60 percent live in a property with less than 2,000 square feet,” said Cherry. “A challenge for builders is to make these smaller homes live large.”
Cherry said Millennials include people identified as traditionalists who have followed the path of going to college, getting married, having kids and buying a house and who tend to want more traditional features in their homes. Another group, identified as trailblazers, want more transitional or mid-century modern features in their homes.
Home Feature Preferences
Regardless of whether they are trailblazers or traditionalists, location is the No. 1 factor of importance in a home purchase decision, above price, outdoor space, the overall design and the walkability of the neighborhood, according to Meyers Research.
“Millennials are twice as likely to prefer new construction over existing homes than other generations, in part because they care about design,” said Cherry. “While the design they prefer varies by market, the majority of Millennials believe good design matters. Transitional design features sell well in every market, even those with mostly traditional buyers.”
About 50 percent of Millennials are willing to give up a formal dining room to have a flexible space.
“Millennials like to customize everything if possible, so we create plans where the formal dining room can be used an art studio or almost anything else,” said Cherry. “An ‘everything’ room is best, particularly in smaller houses, where they can entertain and work and have a glass door to an outdoor space that opens fully like a garage door or retracts to increase their living space.”
Cherry compares the desire for customization to people liking Chipotle, where they can choose every element of their burrito to their personal taste, and to Nike, where they can design their own running shoes.
Millennials, having grown up with technology, tend to be tech-savvy, but also prefer to set up their own technology later rather than have it installed by a builder. The one exception is safety and security technology, said Cherry, which they want to have right away.
Affordability drives many decisions for Millennials, so even though they want sustainable, energy-efficient features, they are not always willing to pay for it, said Wolf.
“One builder decided to install solar panels as a standard feature in all his homes and explained how much the feature would drop utility bills,” said Wolf. “That brought in a lot of buyers who wanted solar panels but didn’t want to pay for them as an option.”
While Meyers Research found that Millennials like the idea of flexibility and interesting features, the bottom line is always price, especially when it comes to finishes.
“Millennials want something to look well-designed, but they are OK to compromise for value on things like substituting engineered floors that look like wood,” said Wolf.
While there’s no one-size-fits-all model for Millennials, homes with an open floor plan, rooms with flexible uses and indoor-outdoor living spaces tend to have universal appeal, particularly if they can be designed for affordability.
Michele Lerner is an award-winning freelance writer, editor and author who has been writing about real estate, personal finance and business topics for more than two decades.