Why Real Estate Pros Need To Be Careful About Catering To Millennials
According to the media and some real estate industry analysts, Millennials are quickly becoming a major force in property markets and need to be catered to by professionals. But could ignoring the rest of the market and riding the trend train be equally dangerous for real estate agents, investors and builders?
Millennials, or Generation Y, is maturing to the age when many have traditionally become first time home buyers and real estate investors. Their tastes and real estate demands may be significantly different than other generations at the moment. Yet, real estate professionals do need to take the macro picture in mind before pulling the trigger on new marketing campaigns, business pivots, branding and developments.
According to real estate industry commentators in the media, Millennials have far different demands from their housing today. They are reportedly embracing a more mobile, less tied down by material items lifestyle. They prioritize convenience, proximity to activities and walkability over housing size, and even owning a vehicle. This is spurring all types of new plans for mixed use developments and smaller urban apartments.
There is no question that generation Y will be a major force in the real estate market over the next decade, and that real estate professionals and companies which ignore them as part of their customer mix could be doing themselves a serious disservice. However, it is also critical to look beyond the sensational headlines, read between the lines, understand media motives and make decisions based on both common sense and real hard data.
One serious disparity being overlooked here is that many of the youngest of generation Y aren’t looking to buy property any time soon. They prefer renting for a variety of reasons – from mobility to being scared of the market. Others, of course, are embracing real estate investing in a big way and are extremely bullish on going all in. Wikipedia dubs this generation the ‘Peter Pan’ generation that don’t want to grow up and are planning to live at home with parents longer than ever.
Secondly, consider the difference between what the media is spinning to benefit local government from tax revenues and density, and what people might really want.
Thirdly, savvy real estate pros should recognize that these current trends are really not that different from previous generations at this point in their lives. Looking at larger historical cycles, previous generations went through these periods too. The 60s, 70s, 80s and early 90s all saw younger generations rebel and buck their parents ideals of the bread and butter single family home and 9-5. Besides Instagram, not much is different this time around.
As many of Y grow into their incomes, they’ll become new money and will likely crave the “McMansions” of a decade ago. Real estate agents, investors and builders really need to consider their personal investment timelines. How long do you plan to continue to invest in general or hold a specific investment property – 1 month, 1 year, 5 or 10, or 100 years?
Many may find they are best positioned for success by placing themselves where Millennial trends collide with other trends. For example; boomers may be seeking to downsize and be near healthcare and services and family or multi-generational housing. Those with a long term view might find suburban and even rural property offers the best discounts in the midterm and the most significant gains in the longer term.