There were many positive headlines this month from various news outlets highlighting the continued growth in total number of real estate sales and growth in home prices. Aiding this growth is the percentage of potential buyers that will make up the next generation to influence the real estate industry and the economy – Generation Y, or the Millennials. The month of September was another solid month for real estate closings, according to the National Association of Realtors sales were up 2.8% over previous year with a total of 484K existing homes sold during the month. What drove the increase was the return of first-time homebuyers to a respectful level of 34% of all buyers being first-time purchasers during September, which is a level that has not been seen in over four years.
The three primary generations that made up over 90% of home purchases this year were the Baby Boomers, Generation X, and the Millennials. The generation segments coincide with an explosion of growth in population after World War II, from 2.8 million annual U.S. births prior to the boom, to averaging over 4 million births for the period classified as the Boomer generation. The birth decline did not begin again until 1963, when the next demographic generation, Generation X, saw a decline in population growth through new births for a period that lasted until 1977. Now, the Millennial generation has entered the prime years for buying a home and how they educate themselves about homeownership is very important to understand as they outnumber the amount of Baby Boomers with a total estimated population of over 83 million and are far more diverse than previous generations.
Millennials currently compose 35% of all homebuyers and I safely predict, from the stand point of the total number of them that percentage will increase in 2017 and beyond. According to a recent survey published by Realtor.com, first-time buyers have increased to 52% of prospective buyers planning to buy a home in 2017. This is up from 33% of prospective buyers that were first-time purchases when the company conducted the same survey the previous year. So, what makes this next generation of home owners different from previous generations but yet the same?
I am part of Generation X, which means I grew up with access to a computer in a classroom but the majority of learning took place from textbooks, and communication was in person or via the phone. Society and the media describes the Millennials as enthusiastic, tech-savvy, entrepreneurial and opportunistic – all good things! Now for the negative labels: lazy, unproductive, and self-obsessed. I like the generation behind me, and hasn’t the label of being self-absorbed been a common description for everyone who is still growing up?
The ironic thing is those are the very similar descriptions that were placed on my generation. We were the slacker generation because of the different music style, referred to as grunge or alternative rock, which was popular in the 1990’s. However, as a demographic group, Generation X became very independent and went to college at a higher percentage rate than the Baby Boomers before them. We all age and mature, but the emotional needs of people that drive their behaviors remains the same.
So what will be different with the Millennials that will affect the housing market? They are delaying or eliminating marriage, but that is nothing new, as the average age of marriage and percentage of unmarried households has been going up since 1960. What is dramatically new is the way of communication. Since the introduction of the iPhone in 2007, people have been able to be connected online through a mobile device 24/7. It has always been a critical skill in business to know how to communicate effectively with your customer. As the Millennials will continue to dominate home sale purchases, communicating effectively and expediently with them will all be about how well agents tap into technology to market and respond to them. While personal referrals are critical for an agent’s success to grow their business, the latest surveys conducted by Zillow showed that 29% of Millennials found their agent online, bypassing the personal referral process. I expect that number will increase, and the number of first-time homebuyers will continue to grow.
How do you communicate effectively with this population demographic? It actually starts before they contact you, as they begin to research the market long before they speak with a Realtor. For starters, you need to have a mobile strategy, a video strategy, and be easily found online with your agent brand visible to them in multiple online formats. In targeting this group, just like with any marketing campaign, you should focus on the buyer’s interests. I like what the Minneapolis Association of Realtors is doing with its first ever campaign targeting first-time homebuyers. They are creating humorous 30-second videos that will be available on social media. You can see their ads at MatchMakersForHomes.com. This makes sense, as the Millennials consume information more and more through brief video segments.
To learn more about building your business, be sure to join the many Baby Boomers, Generation X’s, and Millennials who are all part of United Real Estate and register to attend the United Convention! Go to: Unitedpalooza.com.