The millennial generation has certainly made its mark in the world already, and it’s safe to say that how they buy and sell homes and properties will effectively shape the future of the New York real estate market.
What markets are millennial home buyers buying in? What types of properties are they buying? What are they looking for in real estate? These are all important questions to look at when analyzing the millennial marketplace.
Slower to Jump into Homeownership
When it comes to real estate, the millennial generation has been a little slower-acting in terms of buying homes. According to 2018 year-end census data, roughly 1 in 3 millennials under the age of 35 owned a home. That’s around 8-9 percentage points lower than previous generations of homebuyers when they were in the age range of 24-35 years old.
Still, millennials are buying homes and the homeownership numbers continue to rise steadily within this generation. How (and what) millennial home buyers buy and sell is an important trend to watch because it affects the country’s real estate market as a whole, and it will certainly impact the future of luxury real estate here in New York City.
Millennial Home Buying Trends
We were interviewed on the subject of millennial home buying trends by Cheddar. You can view that video below.
There are definitely some interesting observations to note. First, many millennials have chosen to stay in or come back to the city when buying a home, rather than moving out to the suburbs or rural areas.
“We still have our fair share of people, no matter how hard they try in Manhattan, still want a backyard. They still want a swimming pool. We get that. It’s sort of a natural thing,” says Mickey. “But, we see a lot millennials coming back to the cities because they want their kids to grow up with the culture and the offerings that only major metropolis such as New York can offer.”
The “New” American Dream
As a result, many millennials have been willing to forgo having a big backyard and a traditional white picket fence in order to be closer to a cultural center like Manhattan. We like to call it the “new” American Dream, and it’s definitely different than generations before. Baby boomers were looking to get out of the cities to buy homes and have more space to raise their families. Subsequent generations grew up with this suburban lifestyle, so then it’s almost natural to want to move back toward the cities when they get older.
Technology has also changed how younger people think about living in an urban environment. Ridesharing services and other improved forms of public transportation make it easy to get around the city. You don’t have to live next to a big box store to buy food and supplies. Amazon is just a click away and you get what you need delivered right to your doorstep.
The millennial generation is also much less concerned about privacy than previous generations thanks to social media, reality TV and a more digitally connected society. The big yards and tall fences between houses aren’t as much a priority. In New York, we’ve also seen a lot of baby boomers moving back to the city to be closer to the culture. Again, it’s a natural cycle of living.
Taking the Time to Make Smarter Home Buying Decisions
We’ve found that millennial home buyers have been smarter and more cautious before buying their first homes. Rather than jumping right into a low-end starter home, they are waiting until they can afford what would typically be their second home. They might decide to rent longer and wait for that nicer 2-bedroom apartment to be within reach.
We agree this is a wise strategy. We are always recommending our home buyers look for the next step up if they can afford it. If you are looking at tiny studio apartments, maybe you can actually get a 1-bedroom with the right budgeting. Many millennials are proud to be minimalists and don’t think they need much living space, but then they often regret buying something that is too small. It’s better to wait until you can afford something better that will also appreciate more significantly as a long-term investment.
Whether you are buying your first home or your 10th and whether you are a millennial, gen Xer or boomer, it’s important to make sound decisions when buying a home or investing in real estate. In the end, age is just a number. Smart real estate is smart real estate no matter who you are or what you are looking to buy. Take the time to do your research, crunch the numbers and do what’s best for you and your family.
Tom Postilio and Mickey Conlon are leading luxury real estate brokers with Douglas Elliman Real Estate. They serve home buyers and sellers throughout Manhattan and surrounding New York neighborhoods. When you want to get the most out of your move, contact Tom & Mickey today!