Recent data indicates that millennial buyers are moving to areas and buying homes based on the affordability of homes and the jobs they can get. It is not spurred by marriage or a family for these 20- and 30-somethings. Forty-eight percent of first-time buyers are single, a big change from a generation ago. The majority of those buying are men.
People 36 years old and under make up the biggest slice of home-buyers, at 34 percent. But many of the popular millennial home-buying areas are far from urban trends. They include Hutchinson, Minnesota and Williston, South Dakota. From a millennial perspective, these areas offer more house for the money. Urban areas like San Francisco, Seattle, London, and New York City might be the stuff of glamorous dreams, but their real estate prices are notoriously expensive.
In London, for example, millennials spend more than half their disposable income on housing. Once that happens, a millennial’s overall financial picture can become somewhat constrained, for everything from retirement savings to happy hours. It’s very hard to get ahead. It’s very hard to save for a down payment, especially one for highly priced real estate.
It doesn’t help that millennials also face other financial constraints. Their levels of student debt are also, on average, much higher than those of past generations. Forty-six percent of millennial new home buyers have a student loan debt burden. The median amount owed is $25,000. Debt repayment can, of course, also put a damper on disposable income.
Green and Healthy Living Is High on the Millennial Desirability List
If millennials are choosing to live far from — expensive — bright lights and big cities, another characteristic of the generation is showing up throughout all their real estate choices. It’s a marked preference for green, sustainable living. Buildings that cater to millennials, including firsttime homes and rentals, better have sustainable living practices built in. Millennials will be looking for them.
Nicely enough, the trend toward choosing housing areas based on real estate prices and jobs and the green living trend can work together harmoniously. Green living practices have considerable potential to lower energy costs, for example. Cash-strapped millennials are likely to appreciate that feature just as much as the lower real estate prices. Builders who offer green buildings will be popular.
One of the newer trends, a kind of cousin to green building practices, is wellness building practices. Commercial buildings that promote health are designed, for example, to maximize the amount of sunlight residents receive. They are open and airy. Both these practices promote healthy living. The practice began in commercial buildings, but the commitment to wellness is very likely to become a trend in consumer housing.
In some commercial real estate developments, builders have added amenities that promote healthy living. Communal kitchens, for example, are built with the provision of healthy snacks in mind. No more vending machine areas for candy or chips. Shelves for fruits, vegetables, and nuts are the norm. Storage areas for bicycle commutes are highly appreciated by millennials. All of these practices are likely to influence all types of building.
Are wellness practices as cost-effective as green practices? They can be. But airy space costs more than smaller square footage, so some trade-offs may be necessary.
Co-Living Spaces to Become a Norm?
While green and wellness-based living is popular with millennials, retrofitting houses to be environmentally sustainable and airy does not necessarily jibe with their financial situation.
As a result, another trend has been born. In larger cities, co-housing developments are highly popular with people in their 20s and 30s.
Co-housing developments are analogous to hotels or even sophisticated dorms. Residents have individual rooms. But common areas, including rooms to hang out, laundry facilities and kitchens, are shared.
As a result, co-housing is more affordable than an individual apartment or a single-family house. A co-housing development may also offer sustainable, green amenities that a single person couldn’t afford, such as a rooftop garden or solar power.
Can millennials afford housing? Can they afford the green and wellness building they love? In the most popular areas, it looks as if they are choosing for affordability and employability. Builders who go green will have millennials on their side.