How to Sell Real Estate to Millennials | Profiting from Wealthy Young Homebuyers
By Paul Benson
Tuesday, July 22nd, 2014
We usually associate luxury real estate with the baby boomer generation. But there’s actually a huge opportunity with millennials — folks born between the early 1980s and the early 2000s.
This younger generation makes up about one-third of the population, and their preference for renting over buying is quickly dissipating.
Not only are millennials interested in purchasing real estate, but they especially want luxury real estate, according to Sherry Chris, CEO of Better Homes and Gardens Real Estate.
For this younger generation, luxury doesn’t necessarily mean “large” homes. They are more interested in the amenities, such as wine cellars and steam showers, and they prefer rooms to be multi-functional as opposed to traditional.
Additionally, while baby boomers were more of a “one and done” generation, millennials like to plan for the future. They are very interested in investing in more than one home.
This opens up the opportunity for investors to reach out and grab hold of a growing luxury market, and it’s a sign of things to come…
Matt Winters, 28, is CEO of his own interior design firm. He bought his first home, a four-bedroom in Culver City, two years ago for a little over $1 million. Recently, he bought his second home, a three-bedroom near UCLA, for about $1.7 million.
“I have always felt that having your money in property is the safest and best thing to do if you want to grow your personal wealth,” said Mr. Winters.
Winters doesn’t keep any of his assets in the stock market. He prefers to invest in real estate.
And he isn’t alone. This is a growing trend among wealthy young buyers, and they are acquiring properties at a pace most brokers have never seen before.
According to a recent study published by the National Association of Realtors, millennials are the second-largest group of recent homebuyers, making up 28% of the pool.
The Top 10 Markets
The top three markets for urban centers are San Francisco, New York City, and Seattle. Millennials aren’t tied to their hometowns; they want to go where the jobs are most prevalent and where the economy is booming.
So here’s the question: where should these millennials be investing? Here’s CNN Money’s list of the Top 10 Hottest Housing Markets of 2014:
- Oakland, CA
- Fort Worth, TX
- New Orleans, LA
- Richmond, VA
- Hartford, CT
- Tampa, FL
- Baltimore, MD
- Birmingham, AL
- New York, NY
- Memphis, TN
Texas and San Francisco have become two of the largest and hottest real estate areas for the younger generation, thanks mostly to the growth of tech companies in those regions. Because of companies like Facebook and Google, 70% of the high-end homebuyers tend to be 35 years or younger.
Developers and designers are even adapting to this change. They construct and design with a younger buyer in mind.
Millennials tend to like new construction, modern designs, and large rooms that cater to entertaining rather than separate dining and living rooms.
They also want to walk into a home straight out of HGTV or a modern home magazine. This trend explains why older, chopped homes are not selling. The ones that do are often sold at a discount, leaving sellers coming up short.
But that can put you at an advantage.
You see, many of these homes are now good buys for remodeling projects. Look for the cities that fit the profile, find an up-and-coming area, and then target the old, distressed, chopped-up homes.
Once you find a designer and an architect that knows this new generation of buyers, you can cash in.
There is a growing disconnect between the typical boomer homes and what the millennials want. The millennial buyer tends to be turned off by features such as separate living and dining areas, neutral walls, carpeted floors, distant public transit, and poor wireless and cell service.
The younger generation is so in tune with technology and so constantly on the go that “walkability” to major areas and cell/internet accessibility are top requirements.
So what can you, the seller, do to ensure a buy from the younger generation? Hire a stage manager, repaint the walls to add some flavor, persuade your buyers that the dining room could be used for something else completely, pull up the carpet and freshen up the flooring, liven up the kitchen with a modern look, and consider buying quiet, energy-efficient appliances.
“You want them to think they’re walking into their potential home. A house is an emotional buy and you want to suck them in.” —Brendon DeSimone, real estate agent blogger for Zillow.com.
I’ll have more on these millennial opportunities in a detailed report later this year. It’ll show you exactly how to target these millennial zones, how to remodel these older chopped homes at a discount, and, of course, how to get the most bang for your buck when you’re ready to sell.
Until next time,