The news is out: millennials are buying homes, and the market is rapidly shifting in response.
So, what do Eugene and Bend homeowners need to know? We’ve done a bit of homework for your benefit, and our aim here is to separate familiar stereotypes from the facts.
First of all, let’s clarify exactly what we mean by “millennial”. The term has become a kind of buzzword to describe young-ish adults in general. More specifically though, it refers to people born between 1980 and 1998. (1981-1996 are alternative dates).
According to the National Association of Realtors’ 2018 Report, millennials now make up the largest portion of home-buyers, at 34% of all new homes. A whopping 66% of millennials either own a home or plan to buy one in the next 5 years. So the share of millennial home-buyers is bound to rise even more.
What kind of Homes are Millennials Buying?
A full two-thirds of millennial home-buyers are first-time purchasers. Common reasoning goes that many will be in the market for starter homes.
The NAR defines these as small, usually 1-2 bedroom homes with an average cost between 150-250,000 dollars. The reasoning goes that first-time homeowners will initially opt for a smaller house. Then, as incomes and family size increase, they’ll opt for a more expensive trade-up or premium home.
There are indications, though, that starter homes may be a thing of the past. Particularly in the Bend and Eugene markets, available inventory of inexpensive homes is at an all-time low. Properties in the lower end of the market are inching closer to those in the middle.
Further, fixer-uppers represent a significant portion of starter homes. These are especially unpopular among millennials: a TD Bank survey indicates that 78% of millennials are looking for homes that are move-in ready. Nationwide Mortgages reports that 48% of millennials who buy new constructions list avoiding renovations as the main perk, compared to just 34% of other buyers.
Why are Millennials Buying? (Hint: it Starts with a “C”)
Probably most importantly, though, statistics show that millennials are buying homes because they seek a connection to their communities. A Fannie Mae survey indicates that, for 75% of millennials, feeling engaged in their community is their number one reason for wanting to own a home.
Millennials, in other words, are looking to set down roots. New would-be homeowners are looking for homes that will serve them and their families further down the line.
They want to spend their time engaging the world around them rather than working on their homes or spending time moving. So, more and more are foregoing starter homes or fixer-uppers and looking to move into their dream home straight off the bat.
Some of the reasons for this are economic. Following the great recession of 2008, many young home buyers passed on home ownership, waiting for economic conditions to stabilize.
This gave young buyers more time to save funds to make larger down payments. In 2013, only 14% of millennial home-buyers purchased homes for $300,000 or more, but at present this figure has increased to 30%.
Millennials are also on the lookout for homes that satisfy their current sensibilities. TD Bank’s survey indicates that the three attributes most important to millennials are an attractive design, nice backyard, and proximity to schools or childcare.
Okay, So What About the Bend and Eugene Markets?
Nationwide, the Eugene metro area ranks 106 out of 500 for millennial population per capita. Notably, this is well above Portland, ranked 167. The Bend metro area is way down the list at 331.
Eugene’s relatively high ranking can be attributed, in part, to its large student population. Students aren’t likely to be buying homes. Bend’s lower ranking is attributable to its relatively high portion of retirees.
At the same time, anecdotal evidence suggests that both cities are quite desirable locations for millennials.
The social and cultural perks of relocating to Eugene and Bend are obvious. But also, it’s a truism that people go where the jobs are, retirees excepted. And in Oregon as a whole, the economic picture is quite rosy.
Oregon has the second highest rate of job growth in the country, at 2.7% between December 2016 and the most recent figures. So for multiple reasons, relocating to Eugene or Bend is an attractive proposition for millennials. Current population and home ownership statistics therefore don’t tell the full story about their impact on the marketplace.
Eugene, as we’ve written about before, has the nation’s second lowest housing inventory, and Bend’s market has long been on the up-and-up-and-up.
But even though it’s a seller’s market, that doesn’t mean that listings will automatically sell. If there’s a generalization to be made here, it’s that millennial buyers are increasingly choosy and increasingly willing to wait things out if they don’t find what they want.
Important statistic: two thirds of millennials who enter the market are actively considering renting as an alternative. So sellers need to sell millennials on home-buying, period.
What Can Sellers Do to Attract Millennials?
It’s clear that web presence has become more and more important in the real estate market. In reality, this applies to all demographics. Millennials are obviously more technologically savvy than their predecessors, but they’re also more likely to do their homework before they hit the market.
A big part of this homework involves looking at online listings. There’s an old saying that a picture is worth a thousand words, and it applies to real estate now more than ever before. Quality real estate photography is extremely tough to pull off, and the services of a professional will likely be worth every penny.
In our work as realtors, we’ve perused a lot of online listings, and there’s really no mincing words: most of the real estate photography out there sucks.
This is particularly true of Eugene listings. Think of how much your home will stand out if your photos have a professional touch.
In general, sellers need to ensure that they’ve taken the necessary steps to present their homes to millennials. Completing cosmetic and functional repairs prior to putting a house on the market will often pay dividends. Updates to bathroom and kitchens fixtures are also well worth considering.
At the same time, knowing what repairs will actually enhance the saleability of your house is more of an art than a science. The last thing you want to do is throw money at improvements that won’t enhance the value of your home.
Does Your Realtor Know how to Work with Millennials?
Last of all, consider hiring real estate professionals who are millennials themselves or who have some inkling of how to respond to their particular needs.
Millennial buyers will most likely be working with their own agent (90%, in fact, higher than for other demographics). However, a savvy listing agent can help you present and market your home in the most up-to-date manner possible.
Basically, traditional real estate pitches are out. Millennials tend to know what they’re looking for, even if they’re first-time buyers, and they have a low tolerance for sales-speak. They want the facts about home ownership without the fluff.
But millennials are also value-oriented. So there’s an important balance to be struck. As we’ve seen, millennials need to see how their home purchase connects them with their community.
This is especially true for millennials who are relocating to Bend or Eugene from outside the state and may be weighing multiple destinations. Realtors need to showcase why buying a home in Eugene or Bend isn’t just a good financial investment, but an investment in an active and fulfilling life.
Your listing agent needs to be familiar with your neighborhood’s points of social and cultural connectivity. Needless to say, he or she also needs to be able to communicate that connectivity without sounding out-of-touch.
Not to toot our own horn too much, but at LOHR Real Estate, we’re working to orient our whole approach around the millennial market.
This isn’t just marketing hoopla, mind you. We’ve seen a real deficit in the Bend and Eugene markets of realtors who are stepping out there to meet the needs of millennial home-buyers. So we want to help fill that gap.