Banks and lenders concerned about the readiness of the next generation of homebuyers can take comfort in the findings of a recent survey from Better Homes and Gardens Magazine. Millennials - those born between the early 1980s and the early 2000s - still view owning a home as an integral element of their American dream. They're apparently just rather high-maintenance about the way those homes are constructed.
In its release, Better Homes & Gardens disclosed data from its sixth annual survey regarding the attitude and spending trends of American homebuyers. The focus of the 2014 survey centered on millennials' home preferences, with more than 3,200 prospective buyers, mostly in their 20s, offering opinions on what they look for and value in a home. Frequently noted points of interest were home-improvement spending, personalized features and incorporated technologies.
Eight out of 10 millennials, according to the report, believe owning a home is "part of the American dream." The question remains, however, how plausible that dream is for a generation that remains burdened with unprecedented levels of student loan debt and a job market still clawing its way back toward stability. A separate report from the Boston Consulting Group recently revealed that millennials are willing to spend - they account for an estimated $1.3 trillion in direct annual spending - but that willingness doesn't necessarily equate to mortgage loan approval. Restoring credit, then, will become a priority for a generation figured to outnumber baby-boomers 76 million to 58 million by 2030, in a lending environment where emphases are increasingly placed on loss mitigation and risk assessment.
Sharing the dream
Jill Waage, the editorial director for home content a Better Homes and Gardens, presented some of the survey's findings to the International Builders Show in Las Vegas. She explained that, thanks in part to the interconnected world in which millennials have always lived, their methods for shopping and the priorities with which they approach homebuying are significantly different from those of previous generations. Platforms like Pinterest and Instagram are designed for sharing, a social media trend that has already carried over and will continue to influence what buyers seek in a home.
"Millennials are swarming into the home marketplace armed with information, ideas and a passionate desire for personalization," Waage said. "Home builders, designers, and remodelers should know that this generation expects you to work with them as collaborators, not just contractors. We have seen an explosion on our social media outlets of millennials exchanging everything from swatch styles for wallpaper to outdoor decorating designs. This generation wants homes that reflect their individuality and their sheer size will reshape the home market for decades to come."
The aforementioned qualification issues, however, were also highlighted in the survey. Similar to previous generations, 79 percent of of millennials believe in the goal of owning a home, while 77 percent of respondents agreed that a home purchase is still a good investment. But 35 percent of those surveyed said that a lack of funds for a down payment remained their greatest obstacle to making a home purchase, while just 25 percent said they would be willing to take out a loan in an effort to capitalize on the current market environment.
The latter figure is perhaps most reflective of the challenges faced by college graduates in recent years. A December 2013 Credit.com report found that the average student loan debt total for 2012 graduates had reached $29,400. Meanwhile, the average working millennial won't achieve the median annual salary of $42,000 until they are 30 years old - four years later than the rate of achievement in 1980 - according to a 2013 study from Georgetown University's Center on Education and the Workforce.
How they go about it
Still, the theoretical next generation of buyers has ideas for what they want in a home, if and when they are able to attain their goal of owning one. According to the survey data, millennials are both the least likely demographic to expect their next home to be newly built, with just 18 percent responding accordingly, and the most likely to buy a home they can fix up, at 23 percent. Among respondents, 45 percent said they are in the process of planning or conducting a major home improvement project or renovation, while 75 percent acknowledged that they decorate with furniture and accessories.
Amenities that facilitate casual entertainment are also a priority, with 35 percent saying they desire outdoor living or entertainment areas and 42 percent seeking upgrades to decks, porches and patios. The ability to work from home is also gaining steam, with 25 percent of responding millennials saying they are building or planning to build a home office or work space. Not surprisingly, the same demographic is admittedly reliant on technology to conduct its home search - six in 10 reported using their phone or tablet to access home-related information and 67 percent used the same sort of devices for home-renovation or decorating inspiration.