The stereotype of millennials (a.k.a generation y) as job-hopping, commitment-phobes has transformed… recently, as they now lead the pack in purchasing sprawling, über-expensive digs. This flies in the face of how we think of this generation, but it makes total sense if you take a closer look at the history, habits, and desires of the most studied demographic of all-time.
Young and Wealthy
Now more than ever, an explosion of millennials has won their own financial jackpot, either by launching a successful tech company and striking it rich, or being the lucky recipient of big payouts at winning startups. Cutting their teeth in business, they inherently understand the benefits of home ownership tax write-offs. This elite group now has tremendous buying power, skipping the starter home altogether and going straight to high-end properties.
The millennial wealthy are grabbing up homes in exclusive city neighborhoods, not middle-class suburban areas like most “average” first-time homebuyers. They also may purchase several properties simultaneously, using one or more as an investment or rental.
Brian Jarvis, a communications consultant and former content manager for youth-oriented YAYA Connection, knows about this group: ”I look to a show like MTV Cribs. An entire generation grew up watching their favorite actors, athletes, and musicians show off their lavish homes,” he said. “For millennials, a two-story home in a cookie-cutter suburb is passé. The American dream is now a tricked-out mansion with all the bells and whistles, and their own personal stamp.”
Investing Their Way
More than any other demographic, millennials think that real estate is a solid investment. It seems counterintuitive that this generation would want to buy a home when they are known to move frequently, shrug at the notion of job loyalty, and are loathe to add more baggage on top of a large student loan debt. But as it turns out, they do care about building safe investments—just not the way their parents did.
Add to that the fact that this generation bore witness to financial meltdowns ranging from major banks to the car industry bailout, and isn’t taking any chances with their cash. “Investing in the stock market is too unpredictable and too lacking in the hands-on control mechanisms that young adults are accustomed to manning in other arenas of their life, from their smartphones to their careers,” said Jarvis.
City Life Without the Strife
“Millennials want to live in big cities where the action is, cities that have made regentrified comebacks from the urban decay that led their parents to flee to the suburbs in decades past,” Jarvis pointed out. “But the cost of living in those cities is astronomical. It makes more sense to invest their cash in a home than to burn it up in rent.”
This trend is only going to increase as more millennials buy homes in the city: Urban planners are listening and catering to their preferences, from commuting car-lessly to building homes with all the tech amenities.
The Role of Mom and Dad
Millennials have been called the entitled generation, not only as children but in adulthood, whether by providing wake-up calls for morning college classes or bailing them out of life’s sticky situations. But there’s something else that millennials have: the wealthiest parents of any generation before them. Lucky for them, their parents want to give their kids everything they either never had or never had to work very hard to obtain.
“Generally speaking, you have a generation of trophy kids raised by helicopter parents. For the parents, investing in their child’s home is another avenue to stay relevant and engaged in that child’s life. And if their children have done well for themselves, the parents view it as hard work and want to reward them for it. It’s like raising their allowance on a grand scale,” Jarvis said.
Millennials Have Succeeded
All signs point to millennials becoming the next real estate powerhouse demographic—by playing by their own rules, not the old-school methods. Not only is the housing industry courting this group by building homes to their specs and studying their living habits; they even have primers to understand how to communicate with them. Yes, there is a lot of fuss over millennials, but to their credit this is what they asked for, and they got it.