Rising Interest Rates Prompting Buyers to Restrategize It's no secret that interest rates have slowly, but surely, been inching upwards. A 5% interest will cause many buyers to pause and reevaluate their purchasing power and strategy. Even a quarter point has a real impact on housing affordability. Skepticism is in the air, meaning the frenetic pace of buyers trying to get in at "historically low-interest rates" may be in the rearview. My clients are starting to take more time analyzing deals and understanding what their money buys in this shifting market.
Competing with Boomers According to a report by Nationwide Mortgage, more than half of Millennials expect to enter the housing market in the next five years. At the same time many Boomers, who own two out of every five homes in the US, are looking to downsize as their nests empty. Both seek similar attributes: walkable neighborhoods, smaller footprints in their homes and lots of amenities.
These two trends mean that buyers in different generations—with wildly different points of view - are competing for the same homes. Millennial buyers may find themselves competing with larger pocketbooks in their Boomer counterparts, where Boomer buyers may come up against Millennials who are more willing to put sweat equity into a fixer. For sellers and agents, catering to two different generations in marketing homes will also be a challenge.
Savvy to Renovations & Fixers Real estate television is ubiquitous, and buyers are watching. While HGTV may stage quite a bit of its home buying and renovation drama, Millennial buyers are still far more aware of the work, costs, and implications of a renovation than their parents would have been. Popular TV shows mean a more educated Millennial buyer who knows what to look for in terms of red flags but also has more confidence around renovating a home to make it their own and the ability to see past outdated wallpaper or a wall that can be easily removed.
Well-Researched & Prepared A convergence of TV, online research and social media means that Millennial buyers are entering the market well-researched and prepared. They are relying on real estate professionals not to introduce them to homes, most of which they can find online, but to show them what can’t be researched: whether neighborhoods are up and coming, which properties stand to gain value in the coming years, and guidance when it comes to negotiations, inspections, etc.
Social Media Impact Social media continues to impact Millennial home-buying habits. They rely on online reviews to make purchasing decisions, and a strong online reputation for real estate professionals is a must in catering to this market.
In fact, a recent study showed that Millennials would prefer to buy a house from an influencer over a real estate agent. Showcasing a home on social media, particularly Instagram, is essential for appealing to Millennial buyers.
REALTOR ® Dana Bull is a Millennial real estate expert with Sagan Harborside Sotheby’s International Realty in Marblehead, Massachusets.