Characteristics of Today’s Home Buyers
Are home buyer trends an important factor to consider in your local real estate market? As a seller, this information may help you market your property to a specific demographic if you knew their buying tendencies. Buyers can also use these trends to determine what other types of consumers may be out looking for similar properties (and potentially competing for the same home).
The information is invaluable to a progressive local real estate agent who can market your house and/or determine if these home buyer trends are beneficial for their buyer clients and adjust if they are not.
Young people are increasingly essential to today’s real estate market. In fact, millennials make up the largest percentage of buyers according to the National Association of REALTORS®. They also make up half of all home buyers under age 36. Their buying patterns and preferences influence the ways sellers market their listings, agents advertise their services and other buyers compete.
Whether you are looking to buy or sell a home, consider the following key home buyer trends and the ways they differ from previous real estate purchasing habits.
The Suburbs Reign Supreme
Contrary to common belief, millennials are not all urban-dwelling hipsters with a distaste for the conventional suburban lifestyle. Nearly half – 47 percent – of all millennial homeowners reside in the suburbs, while a third settle down in the concrete jungle. Although the urban core is more convenient and energetic, the suburbs offer greater affordability for first-time home buyers. Since millennials, like baby boomers and seniors, crave larger homes with shared amenities, sacrificing location is a worthwhile tradeoff.
To afford such luxuries, young buyers opt for more remote neighborhoods where their tight budgets stretch farther. Most millennials bypass the traditional “starter home” in favor of something with more square footage. Today’s first-time buyers search for homes that are just as large as conventional trade-up properties — but cost approximately 18 percent less than those traditional next-step homes.
The majority of Americans prefer single-family homes, which are much more common in the suburbs. And, 83 percent of buyers rank affordability and safety as their top two priorities — neighborhood characteristics that may be harder to find in a bustling metropolis. All the more reason to factor in these key buyer trends when you are beginning to start your home search.
Diversity is Trending
Today’s homeowner is more likely to be a person of color than ever before. Just two-thirds of millennial homeowners are white, compared to 80 percent of baby boomers. Meanwhile, 17 percent of millennial homeowners are Latino/Hispanic, 10 percent are black and 7 percent are Asian/Pacific Islander, which is more in line with nationwide population demographics.
This bears out the importance of marketing to all consumers without regard to their color or national origin. The bottom line is that consumers in all demographics are actively buying homes. The more diverse your approach to marketing is, the better opportunity you will have to reach a wider audience and get your home sold.
Renting is Still an Option
Today’s first-time home buyers rent longer before making a purchase compared to previous generations, and the decision to buy does not come without hesitation. Across generations, 52 percent of home buyers regard renting as an imaginable and realistic alternative to buying.
Millennials are most likely to consider renting at 71 percent, but as buyers get older, their interest in renting fades. Slightly more than half of all Gen X buyers consider leasing, compared to one-third of baby boomers and 18 percent of buyers over retirement age.
Sticking to the Budget is Difficult
Nearly a third of buyers exceed their initial budgets, due in large part to high home prices driven up by a lack of housing inventory across the U.S. When supply is low, competition gets tough and many buyers face bidding wars. Only 46 percent of buyers secure a home after their first offer, demonstrating serious competition in today’s market.
When it comes to planning for homeownership, most buyers accumulate their housing down payment by saving over time, but 32 percent find that their personal savings are not enough. What do these buyers rely on? They are reliant on receiving gift money, loans and retirement savings to get their feet in the door – literally.
First-time home buyers, who are primarily millennials, typically spend as much as baby boomers, on their home purchase. And the size of homes purchased by first-time buyers are only slightly smaller than those of repeat buyers.
Buyers Equally Value Technology and Professional Guidance
Overall, more than a quarter of home buyers find their agent online while a third use personal referrals. Millennial buyers read online reviews to select agents, and they look for characteristics like honesty and responsiveness. Buyers also value their agents’ local market knowledge, positive reputation, recent sales numbers and brokerage brand awareness. Most buyers (78 percent) expect an agent to respond to their initial inquiries within 24 hours. Only 22 percent think it’s acceptable for an agent to take two or more days to respond.
Somewhat unsurprisingly, many millennials use online resources to facilitate their home search. And, they employ social networks, seeking input from friends and relatives more than half the time. In comparison, the silent generation (ages 65-75) sought involvement from others just 37 percent of the time.
Most modern-day buyers rely on a combination of online resources and professional guidance. Buyers who use online resources are even more likely to contact a local agent, proving that technology doesn’t necessarily overshadow candid consultants. When they do go online, most buyers rely on their desktop browsers, followed by mobile browsers and real estate applications.
Despite buyers using technology more than ever before, they also understand the importance of live interaction. Most prefer to talk on the phone with an agent (33 percent), and a fair share prefer to meet in person. Only 21 percent prefer email and 15 percent favor texting, uncharacteristic of the millennial stereotype.
Today’s home buyers aren’t completely uprooting traditional house-hunting priorities and practices. Rather, they use available technology to simplify the search process, still relying on the knowledge and skills of real estate agents and other professional to ultimately locate their dream homes. An awareness of home buying trends helps sellers better understand their target market, and it provides new buyers with information about the searching and purchasing process and dispositions of their peers.
Key Buyer Takeaway
While statistics are very helpful to spot trends and identify key marketing opportunities, there is still no substitute for knowing what is going on in the local market. This especially holds true for agents and can be a useful guide for both real estate buyers and sellers too. Get out and visit the neighborhoods in your community and learn as much as you can about all the home options as you possibly can.
Know what is happening in your area, utilize analytics to augment that knowledge, and have peace of mind knowing you are ready to find the home of your dreams in the location you desire at a reasonable price. Happy house hunting buyers!
Additional Home Buyer Tips
The Basics of Purchasing a Home via Teresa Cowart
Mistakes Home Buyers Make by Xavier De Buck
Things to Consider Before Buying Your First Home from Bill Gassett
10 Key Reasons To Use a Buyers Agent via Kyle Hiscock