Millennial Musts: Top 10 Non-Negotiables for the First-Time Buyers
Demographics trends experts I once worked with looked for a hole in the donut. The donut is where everybody looks for opportunity. The hole is where the opportunity is. Here’s a grid from the National Association of Home Builders that summarizes survey findings on what home features different generations prefer.
The overarching findings of the NAHB survey of 4,326 recent purchasers and prospects that project as a proxy of U.S. homeowners note that young owners and would-be homeowners want bigger homes in square footage, and more bedrooms than buyers of other age groups.
NAHB data here seems to jive with the key insights of a Bank of America/Braun Research study that BUILDER associate editor Kayla Devon took a look at last week. Here’s one of Kayla’s take-away passages:
First-time buyers today want a home they can grow into (75%) and would rather wait to save more money for a nicer house in the future (69%). When asked why they haven’t purchased a home yet, 56% of respondents said they didn’t think they could afford a home or the type of home they want – only 34% said it’s because they’re still paying off debt.
To which we’d caution, with all due respect to the statistical integrity of both surveys, take a careful look at the sample base of both studies.
At the very least, what pops out is opportunity. Let me explain.
Braun’s research sample for Bank of America started with 1,001 survey respondents “who want to buy a home in the future,” and zeroing in on 801 millennial interviews–376 of whom came from the original 1,001 respondents, plus an additional 425 from outside that group.
If you base your business strategy on the findings of these studies, you might cater only to young adult buyers who want bigger, better-appointed, more expensive homes, and there might be a self-fulfilling prophecy that starter homes–new, rental-killer first-opportunity nests for people whose “skin in the game” is at least partly expressed in their willingness to take less house for the chance to exit the rental game’s vicious circle–are done for.
The market seems to be saying otherwise, especially when you look at the success ofLGI Homes and D.R. Horton’s Express line.
Skipping the typical starter home makes for a narrative that nicely draws in the trends–a time-lag in household formation, high student debt, slow jobs absorption, later marriages, etc.–but the facts don’t necessarily bear out the truth.
Unless there were far more new start homes being built, or even high-quality resale starter homes coming on the market–which there are not–it would be hard, necessarily to conclude that entitled Millennials want to skip that step. That conclusion, I think, comes from the kinds of people who participated in the Bank of America/Braun survey.
Get rid of the “Millennial cohort” way of looking at the differences and similarities for preferences among the generations, and look simply at the life-stage and economic context filters, and you’ll find that 18 to 35 year-old home buyers more often than not share identical values and preferences with other age groups around safety, durability, performance, comfort, healthfulness, and affordability. As for the features, functions, esthetics, and designs that allow for personalization and connectedness, that’s where the bigger differences among age groups might emerge.
At any rate, it wouldn’t be because they’re Millennials; it would be because they’re younger. Period.
The biggest take-away value we can get from any piece of customer data or research is understanding that homes and communities are their own powerful way to both listen to and train customers. A good new, entry-level home sells to a young adult not just because it does what survey respondents say they want; but because it gets young people to improve on their lives by becoming a buyer.