Are generations different in their approach to buying real estate? The fundamentals of buying real estate arguably haven’t changed, but financial and technological trends have. And with more people seeking houses than houses to be found, home prices have taken an upward path. Despite low mortgage rates, all first-time home buyers face a challenging market.
The Generations
Here is the generational timeline of current buyers:
- Post-millennials (Generation Z): born after 1996
- Millennials: born 1981–1996
- Generation X: born 1965–1980
- Baby boomers: born 1946–1964
- Silent generation: born 1928–1945
The Millennial Catch-22
Millennials put off buying for longer than their parents did. Student debt ranks high among the reasons, causing more than 80%—including young adults with above-average earnings—to delay buying homes. As of 2019, 16% of older U.S. millennials were living with their parents; and millennials in general have been frustrated by their home buying prospects. Their situation is a Catch-22. If they could buy in a rising market, they could start building up assets.
That said, millennials do make up a hefty segment of first-time homebuyers. And when they buy, they’re swift. Boomers pore over the details and crunch the numbers more carefully. But millennials aren’t necessarily remiss, as speed in today’s market is essential.
Technology and Evolving Expectations
Technology may also play a role in speeding up purchases, and how long buyers will wait for approvals. Technology is changing what companies build, what buyers seek, and the timeline of buying.
Indeed, technology is changing everything. Most obviously, it allows for easy browsing of properties and prices, which is especially important to millennials and post-millennials. The younger buyers depend heavily on their online research to make decisions, whereas tours with agents play the major role for older generations.
Technology has made homes smarter and more energy-efficient, and it’s made the process of borrowing and buying more transparent. Some of the most interesting shifts involve:
Smart homes and tech-savvy seniors
Google, Lenovo, Amazon, JBL and several other companies have raised expectations for standard home amenities. Voice-controlled lighting and entertainment systems, remote-controlled and self-adjusting thermostats, connected security cameras, video doorbells, as well as smart locks, clocks, and smoke detectors—all are desirable features in today’s homes for sale. Many of these innovations are just as attractive to people in the senior generations as they are for millennials, as smart homes support growing numbers of seniors who wish to age in place. In senior living and over-55 communities, smart home technology is increasingly senior-friendly—able to adapt to older adults with compromised sight, hearing or motor skills.
What’s next in the senior housing space? It’s becoming a test ground for a new trend in accessibility: self-driving cars. The California company Voyage is already working on creating driverless car retirement communities.
Mortgage Apps and Fintech
Need a mortgage? Now, there’s an app for that. With the consent of the users, the app to retrieves bank account information, then promptly informs the users how much they’re qualified to borrow. It’s a harbinger of future trends. We can expect financial technology, or fintech, to seep into tasks which were once the sole province of brokers, insurers, and title agents, as:
- Deed information is becoming easy to find online.
- Blockchain technology is now being implemented to ensure title integrity.
- Real estate financial markets are increasing their efficiency and transparency.
It’s looking like technology could go a long way in simplifying and democratizing the real estate market. Still, cities and counties will need to make technology accessible, and help ensure level playing fields.
The Struggle for Sustainability
Millennials are drawn to walkable, urban living, and many buyers today seek condos or co-op living. Community gardens, common areas with workspaces, and other shared amenities comprise significant segments of urban and suburban homeownership today. No real estate website is complete without walkability ratings. In a significant financial trend, institutional investors are making purchases based on sustainability.
Behind the trend is increasing concern about climate. Coastal real estate is sinking and cities must respond. Washington D.C., for example, is developing a resiliency plan, aiming to make D.C. “climate resilient” by 2050. Throughout the next 30 years in D.C. and elsewhere, we’re expecting a big push for sustainability-related redevelopment—and a lot of flood damage. Property insurance policies will be raising their premiums accordingly, placing another burden on the younger generations of owners.
Other Trends and Issues to Watch
There’s an app for home flipping, too. Companies are offering cash for homes in the iBuyer market. These platforms are here to stay, judging by the major real estate companies involved. Redfin has partnered with iBuyer pioneer Opendoor, while Keller Williams collaborates with Offerpad. And there’s the Zillow Offers app. Today, this market segment accounts for less than 1% of sales, but the portion is much higher in certain cities, and rising overall. The key benefits to the sellers? Fast cash and convenience. The main drawback? Sellers get less than the market value of their homes, because of the high fees.
Another issue to watch is risk management for online fraud, personal data breaches, and physical crimes. The risks are ever-present in the real estate world as people become dependent on apps and smart features. Today, the way we show, sell, buy, and keep records about our homes, and the way we live them, all provide potential entry points for security breaches.
The iBuyer trend and security issues, in fact, overlap. Until iBuyer platforms catch up on its security issues, anyone can pretend to be a potential buyer over the phone, and attempt to obtain physical access to a property. Be careful out there.
Never to Old to Buy
As noted earlier, some adults have been putting off buying in this market. Know that it’s never too late to become a home buyer. No matter where you are on the generational scale, if you can afford a down payment and qualify for a mortgage, can assume the financial risks of the market, and don’t mind handling (or sharing) the maintenance, home buying has well-known benefits.
And if you do decide to buy as a boomer or older, know your rights. As long as you’re of legal age to sign a contract, you can buy a home. Age-related mortgage discrimination violates the law. Mortgage brokers and lenders may ask for documents that show your age, but they may not deny you a loan on account of your age. And it’s your right to know specific reasons why you were turned down, or why certain terms appear in your approval.
At any stage of life, may you enjoy your home buying journey.