Marketing to Millennials: Exploring the Millennial Niche
As part of your ongoing database development program, be sure you are spending enough time researching and cultivating the millennial generation.
According to the 2015 National Association of Realtors® Home Buyer and Seller Generational Trends study, the millennial generation represented the largest share of recent buyers. The NAR study additionally found that an overwhelming majority of buyers search for homes online and then purchase their home through a real estate agent, with millennials using agents the most.
For the second consecutive year, NAR’s study found that the largest group of recent buyers was the millennial generation, those 34 and younger, who composed 32 percent of all buyers (31 percent in 2013). Generation X, ages 35-49, was close behind with a 27 percent share. Millennial buyers represented more than double the amount of younger boomer (ages 50-59) and older boomer (60-68) buyers—at 31 percent. The Silent Generation (ages 69-89) made up 10 percent of buyers in the past year.
Lawrence Yun, NAR chief economist, says the survey highlights the untapped demand for homeownership that exists among young adults. “Over 80 percent of millennial and Gen X buyers consider their home purchase a good financial investment, and the desire to own a home of their own was the top reason given by millennials for their purchase,” he said. “Fixed monthly payments and the long-term financial stability homeownership can provide are attractive to young adults despite them witnessing the housing downturn and subsequent slow recovery in the early years of their adulthood.”
Other Survey Findings
According to the survey, 13 percent of all home purchases were by a multi-generational household, consisting of adult siblings, adult children, parents and/or grandparents.
The biggest reasons for a multi-generational purchase were cost savings (24 percent) and adult children moving back into the house (23 percent). Younger boomers represented the largest share of multi-generational buyers at 21 percent, with 37 percent of those saying the primary reason for their purchase was due to adult children moving back into their house.
Characteristics of Buyers—The median age of millennial homebuyers was 29, their median income was $76,900 ($73,600 in 2013) and they typically bought a 1,720-square foot home costing $189,900 ($180,000 a year ago). The typical Gen X buyer was 41 years old, had a median income of $104,600 ($98,200 a year ago) and purchased a 1,890-square foot home costing $250,000 (same as last year).
Seventy-nine percent of all buyers considered their home purchase a good financial investment, with millennials (84 percent) and Gen X (82 percent) having the highest share, followed by younger and older boomers (both 77 percent), and the Silent Generation (72 percent).
Generation X buyers (68 percent) were the most likely to be married, younger boomers had the highest share of single female buyers (23 percent), and millennial buyers were more likely (compared to other generations) to be an unmarried couple (14 percent).
Searching for and Buying a Home—Regardless of their age, buyers used a wide variety of resources in searching for a home, with the Internet (88 percent) and real estate agents (87 percent) leading the way. Millennials were the most likely to use a real estate agent, mobile or tablet applications, and mobile or tablet search engines during their search; Gen X buyers were the most likely to use an open house.
Although the Internet was the top source of where millennials found the home they purchased (51 percent), they also used an agent to purchase their home at a higher share (90 percent) than all other generations.
The majority of all buyers (79 percent) purchased a detached single-family home. Gen X buyers represented the largest share of single-family homebuyers (85 percent), and the Silent Generation was the most likely to purchase a townhouse or row house (10 percent). A combined seven percent of millennial buyers bought an apartment, condo or duplex in a building with two or more units.
Among the biggest factors influencing neighborhood choice, millennials were most influenced by the quality of the neighborhood (75 percent) and convenience to jobs (74 percent). Convenience to schools was most desired by Gen X buyers and proximity to health facilities by the Silent Generation.
Millennials plan to stay in their home for 10 years, while the baby boom generation as a whole plans to stay for a median of 18 years.
(For more details on the survey, visit www.realtor.com)
Obviously this is just one survey and you will want to do some additional research before establishing a Millennial niche. However, it makes sense to initiate some basic steps so that you will be prepared when these young people are ready to make their first purchase. Here are a few suggestions:
- Stress Your “Customer for Life” Approach. In your customer newsletters and other communications, be sure to emphasize that you welcome the opportunity to help younger family members with a future purchase. You definitely want your current customers to refer their children to you.
- Hold a “First time Buyer Seminar aimed at young people. You can encourage parents to bring their children.
- Develop a flier/brochure designed for younger buyers. Highlight the importance of saving (for a down payment) and the careful use of credit cards.
- Add a special section on your website for millennials. It can feature such topics as The Basics of Buying Your First Home, How to Obtain Your Down payment and the ABCs of Your Credit Score.
- When meeting with Realtors, emphasize that you welcome the opportunity to assist millennial buyers.
- As part of your corporate outreach program, advise HR directors that you can provide a special workshop for younger buyers.
- Adapt some of your social media activity—including Facebook and Twitter—to the younger audience.
By planning now, you’ll be ahead of the competition when this group of young buyers begins looking for help to make their first home purchase.