How Millennials are Changing the Luxury Real Estate Market

Some people associate Millennials with incompetency and inertia, imagining that most people born between 1985-1996 are not business-savvy enough to impact the economy significantly. The reality is, the stigma that culture placed around Millennials could not be further from the truth, and Millennials have become one of the most influential and important demographic segments within the housing market.

Millennials are far from being superficial, naive real estate buyers hunting for the most Instagrammable Manhattan view out there. In actuality, the Millennials' purchasing habits and real estate preferences greatly impact the industry, and have been becoming more and more a key influence is more of this generation looks to become homeowners. Millennials are changing the luxury real estate market as we speak.

Naturally, if you want to sell or buy a luxury property, you want to know which home features people pay extra for. It is always better to introduce home updates that will appeal to serious buyers if you decide to move out. And Millennials have positioned themselves as buyers who are willing to invest in real estate. So much so they are de facto dictating the luxury real estate market trends. In fact, 38% of home buyers belong to this demographic group.

Millennials prefer their starter home to be a luxury property

The dominant rhetoric in recent years has labelled Millennials as hesitant to leave their parent’s homes. However, it is not the case that Millennials do not want or cannot afford their own homes. The latter has especially been bolstered by COVID as many Millennials were able to temporarily live with their parents, saving significant money for down payments. Because of the impact of witnessing the Great Financial Crisis, Millennials have taken, perhaps, a more cautious approach to buying, waiting longer to invest in their first property. This demographic group has strong buying power thanks to high incomes from salaries in industries such as Tech and Finance, particularly in the large, coastal metro areas around the country.

As a result, Millennials do not shy away from having their first purchase be a luxury home. This tendency makes them a true force of nature in the world of luxury real estate. The slight delay of their dominance in real estate has enabled them to invest in properties or rent luxury homes in some of the best areas of metropolises, such as New York. Of course, some NYC neighbourhoods are more welcoming to the Millennial's lifestyles and living preferences.

Millennials’ backgrounds and attitudes are changing the luxury real estate market

It is not just the choice of neighborhoods that affects the change in the luxury real estate market. As a generation, Millennials tend to be better educated, have better earnings, and inherit more than people in the past. All of this makes for a demographic group that has strong buyer power, and is investing its assets into luxury homes that are more functional and more energy-efficient.

Furthermore, Millennials grew up amid the technological revolution that has changed how the world works. As a result, the technical savviness of Millennials also dictates how luxury homes will be furnished, making the concept of smart homes synonymous with luxury homes.

Today, smart home features are a must in luxury homes.

Millennials increasingly work from their homes

The Covid-19 pandemic has influenced luxury real estate trends and predictions in upscale locations such as New York and the way most Millennials do business. So, a recent switch to remote working allows many Millennials to work from their home office. And what's better than basing your home office in a luxury home that is your “vision board” in real life - in a fantastic location at that.

Millennial homebuyers prefer to buy luxury homes with home offices.

Given this trend, luxury homes in sunnier, suburban, and remote locations surrounded by nature and other stimulating perks are in demand. In addition, Millennials are moving to luxury estates in more affordable cities as they no longer have to commute to work. However, it is not just luxury real estate that is catching up to these changes. According to  Tik Tok Moving and Storage, moving companies are also enhancing their range of offers and services, thus enabling their clients to prepare and execute a long-distance move in the shortest amount of time possible. 

Sustainability is becoming the norm in the world of luxury real estate

Another significant milestone in the world of luxury homes has to be the recent turn to sustainable and environmentally-friendly home features. Sustainable living has finally become a priority for eco-conscious homebuyers who want to reduce their carbon footprint by turning to green energy. And it is no coincidence this is happening right now. As they become older, people born in the Millennial generation tend to be more aware, outspoken, and fervent regarding these noble agendas.

Hence, experts in the luxury real estate market respond to these consumer preferences. As a result, energy-efficient HVAC systems, solar panels, green roofs, Tesla chargers, and other such sustainable home features are becoming a necessity rather than an exception in the world of luxury real estate. Since such technological advances in luxury real estate have the potential to set the bar for other real estate markets, soon enough, we are likely to see similar developments sweeping the industry.

Millennials are changing the luxury real estate market for the better

In sum, Millennials are changing the luxury real estate market mainly toward a more self-conscious, environmentally friendly, and data driven industry. Given the strong purchasing power and cultural impact of this demographic, it is likely that they will continue to shape market trends and dynamics in the near future.

Millennials: Get Creative with Saving for Your First Home

It is no surprise that many Millennials struggle with saving for a down payment in today’s environment. As Millennials are more burdened with Student Debt as well as other debt such as Credit Card, the ability to save as become more challenging for this group. Many Millennials find themselves in large metropolitan areas because of stronger job markets but cost of living in these areas is elevated compared to non-metro areas. In some instances, wage growth has lagged behind rising home prices, creating an additional challenge.

However, a recent Bankrate Survey has revealed some surprising tactics that Millennials are taking in order to make a down payment on their home purchase. The results revealed that Millennials are more likely to dip into Retirement Savings or live with Family for extended time to save. According to the survey, 13% of Millennials dipped into retirement savings compared to 8% of GenX and 7% of Baby Boomers.

Millennials are highly important group the Housing Market, and they are getting creative with ways of saving a down payment at levels that are not seen in many other generations. Millennials understand the value of owning a home and how it contributes to wealth accumulation, so they are tackling savings issues head-on. We often see that Millennials are very excited about purchasing a home.

While we are not Financial Experts, there are certainly ways to creatively save towards a down payment by making simple adjustments to your everyday life. Below are some creative ways to save for a home down payment: 

We are not Financial Advisors and would urge any prospective Home Buyer to consult their Financial Advisor to understand the implications of tapping into Retirement Savings for a down payment.

Ways to Save for a Down Payment

Reduce Your Rent: If you are currently renting, review what you are currently paying and see what options you may have. If you have been a good tenant, use this as leverage to negotiate with your landlord for a better rate or no increase in rate. If it is feasible, have you considered living with parents or friends while you are trying to save?

Track Your Spending: In a so-called "cashless economy" it is easy to lose sight of how much you are spending, when most transactions are done on credit cards and Apple Pay. Consider making a spreadsheet to track expenses or using a tool such as Mint to keep track of your spending. You might be surprised at how much you are spending on Taxis or Ubers in a month's time. It is a great way to find areas to cut down on spending.

Make It Automatic: Take advantage of automatic savings that may be offered by your bank. Look into options such an auto transfer of X amount of dollar each month to savings or programs that round up each purchase to the nearest dollar and transfer that to your savings. Additionally, utilize your employer's direct deposit option and add your savings account as one of the accounts to receive the pay. You can specify the dollar amount to be deposited to your savings from each paycheck. This aligns perfectly with the old saying, "Out of Sight Out of Mind"

Use Work Bonuses: If you receive an annual bonus at work, consider putting that into your down payment savings account each year. While it is important to have fun and celebrate your success, the wealth that owning a home generates will pay off more than that night out at the club.

Reduce Happy Hours: Everyone loves a good happy hour to help get through a tough week. If you are making it a habit 2 times a week it is costing you. Consider the average happy hour drink costing $7 with tax and tip. At twice a week, thats $728 a year on happy hour....assuming you only get one drink at each of those happy hours!

Check Monthly Bills: What monthly bills are you paying that might have areas to reduce the cost? Cable and cell phone bills are great places to dig deeper at the features you are paying for. Do you really need HBO at $12 a month PLUS Netflix for another $10 month in addition to the hundreds of cable channels you are getting? 

Don't Forget Family & Friends: Discussing money with anyone is always a sour subject, especially with family and friends. However, they can be an excellent source for help with your down payment. Consider asking parents for help as an early inheritance or as your wedding gift now in exchange for not receiving a a gift at the time of marriage. Instead of dinners from friends for your birthday or gift cards, let them know you are working towards purchasing a home and cash would be the best thing you could receive right now! True friends will understand. 

Gym Membership: Your gym membership is a great opportunity to cut down on monthly expenses. With so many fitness apps such as ClassPass, YouTube Videos, and equipment, exercising at home has never been easier. If you are an avid gym user, this option is probably not for you, but if you use your gym occasionally, it is something worth considering. Your $250/month Equinox membership is costing you $3,000 a year...that is a lot of money! If you cannot give up your memberships, look into options such as corporate discounts or special incentives that your gym or workout venue of choice offers. 

Get Your Caffeine Dose at Home: Sometimes a morning cup of coffee (or 3) feels like it is the only thing that will get you moving...trust us we know! However, your daily trip to Starbucks during the week for a grande nonfat latte at $4.78 is costing you $1,243. Save that money and drink your coffee at home and imagine how good coffee will taste in your new home!