Marketing Homes to Millennials: Irrelevant? Or the Future?

(image courtesy of mpamag.com)

If there is one group of people the housing market has not figured out, its millennials. This is not just a “feeling,” this lack of understanding is found in the media. Take two recent articles from NBC News and Forbes. Although published less than two months apart, one would think that they were reading two contrasting articles, about two different generations of people, in two separate times.

In a June 2017 NBC News article titled, “Who’s Powering the Housing Market? Surprise! It’s Millennials,” Herb Weisbaum makes the case that contrary to popular belief, millennials are just as interested in owning a home as anyone else. He even quotes a study saying that millennials now make-up the largest group of people looking to buy a house (34 percent) (Weisbaum, 2017).

Fast-forward two months, and one may read a strikingly different story in Forbes. In an article by Annabel Acton titled, “10 Things You Need To Know About Marketing To Millennials,” a far more grim picture is painted about millennials and their relationship to home ownership. The article states, “Millennials are in a financial bind. They’re in debt (in 2016, the average college student graduates with $37.2k in debt), they can’t afford houses and are staring down the barrel of some pretty epic changes to the workplace, namely automation. Saving for a big house doesn’t make sense. Spending $800 on a primo festival experience does” (Acton, 2017).

This week, I also saw an article floating around Facebook called, “Millennials Are Buying Homes Because of Their Dogs – Not Their Children or Marriages” (Lewis, 2017). However, further examining the relationship between children and millennials can make this already complicated matter even more so…

One could sit here and argue who is right and who is wrong. Quite frankly, both are probably right to an extent. Millennials can easily make up the largest group of people looking to buy a home, but can also be largest group looking to rent and/or is plagued by debt. That argument aside, what seems to be more interesting is the fact that an entire industry (real estate) has neglected to understand and appeal to a generation that is a point in life where home-ownership is a serious consideration. Not only that, there also seems to be a lack of desire within the real estate industry to market to millennials.

In the NBC article, a Keller Williams agent in the Seattle-area states, “They can use the technology to find what’s on the market, so our role tends to be different for them. They understand the role of a real estate agent, as far as negotiations, contracts and paperwork, but they don’t necessarily need us to find the homes. Our role is to facilitate the sale” (Weisbaum, 2017).

Granted, the real estate industry has different challenges and considerations than a more traditional corporation, especially when one takes into consideration the shift from an “owning” economy to a “sharing” economy, and the rate of affordability based on location. Nevertheless, if a marketing pitch included the phrase, “They can use technology to seek us out,” I doubt that would go over well in the conference room.

The only thing that can be argued is that if the real estate market does not take time to get to know and understand the largest group of homebuyers, they are clearly missing an opportunity to sustain its industry in the long run. Moreover, the question remains, is there an untapped market here?

 

References

Acton, A. (2017, August 02). 10 Things You Need To Know About Marketing To Millennials. Retrieved August 04, 2017, from https://www.forbes.com/sites/annabelacton/2017/08/02/10-things-you-need-to-know-about-marketing-to-millennials/#1c87fccf2e6c

Lewis, R. (2017, July 27). Millennials Are Buying Homes Because of Their Dogs | Money. Retrieved August 04, 2017, from http://time.com/money/4876151/millenials-homes-dogs-children-marriages/

Weisbaum, H. (2017, June 05). Who’s Powering the Housing Market? Surprise! It’s Millennials. Retrieved August 04, 2017, from http://www.nbcnews.com/business/real-estate/who-s-powering-housing-market-surprise-it-s-millennials-n768196

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9 Responses to Marketing Homes to Millennials: Irrelevant? Or the Future?

  1. Erika Najera says:

    Brett,

    This is quite the controversial topic! One that I also have mixed feelings about. I agree with both articles to some extend, quite frankly, I believe that the millennial generation is misunderstood because it is constantly changing. But I think like, anything else in this world, some millennial are interested in buying homes but don’t understand how to begin or the different options to buy, or even how long or what the process is. So to the point that millennials make up the largest group of people, I do believe it is an untapped market with potential. After all, millennials are the “why” generation; the generation that wants to understand how, why, we do things.

    Thanks for sharing!
    -Erika

  2. Diane Cancino says:

    I would favor the Forbes article’s overview of the situation. How can a segment of society that has an average of $37.2 thousand in debt (i.e. a down payment for a home) think about buying a home? For example, the median home price in LA County is $550, 000; San Diego County is $525,000 (Khouri, 2017).

    I would argue that the dream of home ownership is more distant for this generation than those who came before. It boils down to economics, not marketing.

    Khouri, A. (2017, May 23) L.A. County median home price ties record high as housing market sizzles. The Los Angeles Times. Retrieved from
    http://www.latimes.com/business/la-fi-home-prices-20170523-story.html

    • @iamlawless says:

      Another vote for economics – yay! Spot on. It depends on where they live and the general cost of living is a large factor.

  3. Teresa Jackson says:

    Brett,

    You have a very interesting perspective on millennials and home ownership. I agree with you, it’s a mixed bag of issues. However, consider other factors like the high cost of purchasing a home in the major cities across the US that draw this age group, and their priorities in terms of where they choose to spend their money – travel & leisure vs. investing in their future, including home ownership.
    Like Diane, I also think home ownership was largely a generational gauge of success for the Silent Generation, Baby Boomers, and Generation Xers. Millennials will find other ways to invest in their future.

    https://www.cnbc.com/2017/06/30/heres-how-millennials-spend-their-money-compared-to-their-parents.html
    http://www.marketwatch.com/story/millennials-dont-trust-investment-advisers-heres-a-solution-2017-04-20

  4. Paula Manuel says:

    Brett,
    I don’t believe millennials are irrelevant at all in the burgeoning housing market. Millennials are recent college grads embarking on new careers who are a prime target for real estate brokers and mortgage bankers. I believe millennials are an intelligent and misunderstood demographic who want to make smart investments and would respond well to target marketing.

  5. Diane says:

    I agree. I was the exception, not the rule, buying my first home at age 23. Home prices were also WAY less. KICKING myself for selling the house in Riverside. I think millennials get a very bad rap because our economy is so different now. Wages haven’t gone up all that much. But the cost of living has. I do agree, however, that millennials aren’t ready to put down roots yet. Moreso than other generations, they want to be flexible with their living and working situations. Those who are investing in homes are turning their homes into income streams with AirBnb. Millennials are enterprising and amazing. The media should really take note of how they are using real estate versus if they are following the traditional model. Millennials are change makers.

  6. Krystina Francis says:

    I’m not surprised that us millenials are now the primary buyers in the housing market, but I’d be interested in finding out what kinds of homes millenials are buying. For instance, minimalism and small homes are movements that seem to resonate with milennials, especially urban dwellers. I wonder if milennials are primarily buying small homes.

  7. Nathan says:

    Hi Brett,

    This is an interesting post. I think that the arguments in both articles have merit. On the one hand, millennials are a giant generation at prime age to be moving up in their careers, looking for their first or second home, and starting families. On the other hand, millennials do face financial difficulties in saving money to purchase a home due to their unfortunate generational timing from the Great Recession and high cost of living. More people from this generation have attended college than any in history, so it makes sense that many still have student loan debt that inhibits home purchases. Millennials are also less likely to be married than previous generations, so there may not be as much of a desire to purchase a home. However, the sheer size of this generation leads me to believe that there are plenty of millennials who are married or have children and have a desire to settle into a home purchase.

    I tend to think that previous generations were inspired to make home purchases because they were seen as solid investments rather than assets. One of the problems with this generation is that millennials have lived through a time when home values plummeted during the Great Recession so they might be hesitant to take such a risk. With this in mind, I do think that millennials represent a virtually untapped market in the real estate industry and more effort should be focused on changing perceptions of home buying.

  8. @iamlawless says:

    Let’s pair the demographic data with the economic graph. If millennials aren’t buying homes then our economy is in trouble. Let’s all not forget that millennials are aging (gracefully) and that the top end of millennials will be 40 in less than 24 months. Millenials like to spend on experiences rather than debt, but that doesn’t mean they aren’t buying homes. Marketing homes to them is wise because..well, there isn’t anyone else out there to market to between the ages of 25 and 40 when first time home ownership sets in.

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