Millennials make up the next generation of high-net-worth buyers, and spend 21.6 percent of their income on housing. Here’s what makes them tick and what they’re looking for in an agen
Meet the rising group of millennial millionaires: They’re bootstrapping, self-motivated workers who come from diverse backgrounds and have built successful businesses. And now they’re center stage in the world of real estate as mature (and wealthy) adults ranging from 25 to 41 years old.
While marriage rates may be on the decline (59 percent are still single, according to Gallup), homeownership remains a priority for Gen Y, and they are a savvy group of well-researched buyers who are looking for long-term homes that offer a sense of community.
How are high-net-worth individuals defined? Forbes has defined them as people or households who own liquid assets valued between $1 million and $5 million. Technology is certainly a defining factor for this group of buyers, a considerable number of whom are social influencers, blockchain investors and metaverse enthusiasts.
They’re the brave pioneers at the forefront of the metaverse. In fact, Wealthramp recently reported that about a quarter of millennials have invested in cryptocurrencies because they consider it the future of investing. Ambitious, intelligent and future-focused, they want to be on the cutting edge of technology and aren’t afraid to dive in. In short: they’re primed and ready for what’s ahead. Or, rather, what’s now.
The “starter home” is a concept that is quickly becoming antiquated — or at least greatly expanded to encompass multimillion-dollar luxury estates.
Starter homes used to be seen as a great way for young people to stop paying monthly rent, build equity and save up for a larger home. Over the past few years, millennials have been skipping starter homes altogether. They have been renting for longer periods and buying larger properties later on.
We’ve been experiencing this great shift in behavior and it has only been on the rise due to remote work and flexibility since the pandemic. And once they buy, they pay a pretty penny. It was recently reported that millennials spend 21.6 percent of their income on housing — more than either Gen X or baby boomers.
So, what makes them tick? What’s shaping their goals, dreams and mindset? Here are three things I see shaping this next generation of high-net-worth buyers.
- The age of digital consumerism and the desire for personal touch…
Millennials are the first generation to mature in a digital environment, and this is no small thing. Studies have shown that 91 percent of millennials prefer to shop online, with just 9 percent choosing to shop in-store only. They’re looking for a convenient, fast-paced experience and to leverage their own access to information and data, thoroughly researching the market and homes when looking to purchase. And it’s all done from their smartphones.
Knowing this, at The Agency we support agents in meeting the expectations of the tech-savvy buyer, providing real estate professionals with technological resources, such as a greatly enhanced website, data-driven insights, improved lead generation functionality and innovative PropTech platforms. When agents have the tools they need, their efforts can be focused on what they do best — selling real estate.
Gen Y is highly educated; these buyers know what they want and use the tools they have to find it — one of these crucial tools being a knowledgeable agent. They understand the constraints of the current, pent-up market and the importance of having an expert negotiator on their side when entering the “bidding war” environment. It’s no secret that without an agent, it’s hard to get your foot in the door in an extremely fast-paced and competitive environment.
When millennials do purchase, they want the real deal. Leapfrogging the traditional stage of buying a starter home, high-net-worth buyers are jumping into great neighborhoods, spacious homes and stylish abodes. Technology helps them find just what they are looking for.
- Social media’s influence on aesthetic appreciation…
Young, savvy buyers, the target market for starter homes, are not buying starter homes at the same rates as past generations. And social media has had an influence on their aspirations for their first homes.
Growing up in the era of Facebook, Pinterest and Instagram, appearances have been front and center for millennials. They dawned in the age of social media, a world in which how you are perceived is more important than ever. Pinterest and Instagram have curated visions of ideal lifestyles that buyers seek out; they’re tapped into trends and have the desire to upgrade, renovate and decorate their homes to curate the look and feel they want.
The pandemic has only escalated this priority, as young adults spent (and continue to spend) more time at home than ever. The concept of home has never been more appreciated. Millennials love the charm of older homes, including pre-war, mid-century and Mediterranean styles. Earthy tones, farmhouse sinks and a tranquil atmosphere — home is their oasis. To add to the aspirational lifestyle of this next generation, we’re also seeing millennials investing in vacation homes in secondary markets via new fractional real estate models such as Pacaso.
This means they are looking to work with agents who get it — who understand what they are looking for and can help them envision the potential in a property. In order to appeal to the millennial buyer, agents simply have to be on social, showing their aesthetic prowess through beautiful pictures, eye-catching reels and their own personal branding.
It all comes down to marketing. That’s one of the key reasons we’ve created an in-house creative division and social media strategists at The Agency who help agents build their personal brands and look great while doing it. Agents need to keep their social media on point as they work with this demographic.
- The blockchain technology revolution has arrived…
When it comes to blockchain, millennials are leading the way as early adopters, pioneering technologies such as cryptocurrency and NFT in the world of real estate. More and more sellers are accepting cryptocurrency as a form of payment, and the possibilities are exciting. With the potential to streamline the real estate process via smart contracts and automation, the industry as we know it might just change altogether. Plus, blockchain offers additional collateral and loan options for the tech-inclined buyer.
NFTs and tokenized real estate are offering easy ways to transfer ownership in virtual or physical real estate at the touch of a button. High-net-worth buyers need to work with an agent who understands blockchain and is able to expand their real estate options to include crypto and NFT. The Agency is at the forefront of this technology and helps agents navigate these new processes with the aim of making the client’s transaction easy and successful.
With the draw of the city very strong for young people, a cost of admission is required. Purchasing in metropolitan areas is costly, and first-time buyers are often renting an apartment until they are ready to buy. When they do buy, the price tag is often in the millions.
Alternatively, some wealthy millennials are buying vacation homes in lieu of primary residences because it is too expensive to buy in the cities in which they live. A cozy beach estate in the Hamptons or country cottage in Sonoma just two hours from a major city is becoming their first property investment while they continue to rent and work in major metropolitan areas.
All in all, millennials understand the value of real estate; investing in a home is still a priority for these buyers. By working with agents and a savvy brokerage who understand their needs and goals, they have the opportunity to build wealth and add certainty to their futures.