Every day you read “Trump is the downfall of America,” and 6 years earlier you heard the opposing side stating “Obama is the downfall of America,” but if you want to find common ground bring up the millennial generation. Quite frankly, if America did a yearly poll to unite the left & right, this might be topic where the glue binds. However, we’re not trying to unite the country today nor bate either side, but merely shade light on next group of home improvers: millennial’s.
First and foremost, I’d like to announce that I’m a millennial (born in 1991) and if you’re not familiar with “millennial’s,” it’s the demographic of people born between 1980 to 1995. According to researchers, the early 80’s and mid 90’s continue to remain as the generational framework. Identifying such groups has been well-documented for generations and central to our capitalistic countries sustainability. These research studies are central to the longevity of large conglomerates and they often finance these studies. These insights give evidence on many things from technology, education, preferences, and much more.
So what do we know about millennial’s and purchasing homes?
Well, if you’re a realtor you better refrain from the age discrimination, because according to National Associations of Realtors, they had the highest share of home buying activity for 5th STRAIGHT YEAR!* Some may ask, how? This generation is now 10 years removed from the great 2008 housing recession and they finally have the “MULA” (#1 Savings – most popular form of down deposit) and (#2 is a gift from relatives/family often boomer generation).
Keep in mind the combination of the 08′ recession, along with the average graduate leaving school with $27,000 of student debt are not the ideal ingredients for homeownership. However, 10 years removed from the recession has allowed them to save adequately and pay off their debt. So, congratulations on your first-home purchase. Here’s the keys and there’s the problem’s!
The renovation trends are steadily increasing:
The good news is that these well-known basement dwellers are getting the boot from the parents, and spreading their wings in the marketplace. However, the average renovation from millennial is still significantly lower than their peers. The evidence favors a 7% increase in renovation expenditure from 2015, which is positive in a year-over-year review, but much less than their peers.
Reason’s why millennial’s spend less on renovations:
- They prefer multi-family housing (townhouses, condominiums, etc.)
- More HOA costs, less maintenance, and less interest on exterior upkeep
- They favor new development’s rather than fixer uppers. First-time homeowner’s favor – one-stop shop and fewer headaches (sorry Chip & Joanna – magnolia)
- Saddled with debt from college & 1st post college vehicle
General contractor’s and home builder’s can give you a first-hand account of these marketplace trends especially throughout the Northwest Indiana Region. In my town alone (Dyer, Indiana), there’s been a huge demand for town houses and multi-family construction. Yes the older generation of millennial’s (80’s babies) have successfully navigated the financial hurdles to purchase their first-home, but there are MANY adult’s swimming against the current.
So, what do these individual’s do? They have to rent or continue to live with their parents. The best way to provide a visual reference is the movie “Failure to Launch” with Sarah Jessica Parker/Matthew McConaughey.
Item’s to know as a contractor or home improvement service when working with this age group in 2018
- millennial are 7% more likely to pay with Credit Cards
- 50% of millennial’s are “hesitant” or “anxious to use a bank loan for a home improvement project (gethearth.com)
- 26% of millennial’s are sure they could come up with $2,000 if needed.
- Paying with Cash eliminates investment opportunities
- 57% of millennial’s feel ” nervous” or “overwhelmed” about buying a fixer upper.
This article is only part 1 of 4 throughout our 2018 blog series pertaining to this specific demographic, because there is way too much information to submit in one article. We believe being educated about your customer’s and their consumer behavior allows us to best present them with products/services.
Have you ever experienced a financial generational gap?
My experience: While working at Hertz Rental Car I once asked an 86-year-old woman for her Credit Card pertaining to the vehicle’s security deposit (standard company protocol) and I thought she was going to whack me. However, her generation “Silent” very seldomly use credit cards, and she later informed me her only credit card was in a lock box at her house.
Information was used from these sources:
Houzz.com, National Association of Realtors.com, Forbes.com, Money.com, and living-proof as a 26 year-old.