• Dad lifting child while laying on grass in front of a brick home
  • Mom, dad, and children playing outside in front of a brick home

It is tempting for those who analyze consumer trends to arrange age groups into neat and tidy “cohorts.” They are given cute names like “Baby Boomers” “Generation X” or “Generation Y” (aka, “millennials''), and immediate conclusions are drawn. However, they are far from completely homogeneous. Of course, there are similar traits among these groups, especially regarding their preferences about their homes. 

Why? Life stage.

The families that fall into the “Gen Y” group (born between 1977 and 1995) typically have young children, college education debt to pay off, enough time in the workforce to have earned middle management positions. They’ve also been impacted by powerful economic fluctuations (e.g., the Great Recession) and, more recently, the COVID pandemic. All these factors inform their opinions on large decisions such as buying a home. 


If you’re a young homebuyer, consider the advantages of a brick exterior. These homes deliver sustainability, lower maintenance, and potential resale value. Ask your builder to check with the experts at Acme Brick.


How Large is This Group of Homebuyers?

For those who are a part of the new home sales “ecosystem” - architects, builders and REALTORS® - this Gen Y group is very important to track. Its sheer size overshadows all other generations. 

According to the National Association of REALTORS®, as of 2022, millennial buyers 23 to 31 years (younger millennials) and buyers 32 to 41 years (older millennials) continue to make up the largest (and growing) share of home buyers at 43 percent: Older millennials are 25 percent and younger millennials make up 18 percent of the share of home buyers.

NAR also notes that millennials have been the largest share of buyers since the 2014 report. Eighty-one percent of younger millennials and 48 percent of older millennials were first-time home buyers, more than other age groups.

At the beginning of the pandemic, we noted the “Top Four Priorities of Younger Homebuyers.” Aside from the record low mortgage rates that were reported at this time, the information remains accurate, two years later. Click here to get a snapshot of the things that are most important to this group.

An Expert Who Wears Three Hats

Three factors make Stephanie Smith an excellent choice to offer opinions about younger homebuyers. First, she is the social media director of Acme Brick, which gives her excellent insights into the trends of the construction industry. Second, she is a licensed REALTOR®, with The Lifestyle Investor, Powered by eXp Realty®, who has helped countless young homebuyers navigate the labyrinth of finding and buying a home. Finally, she is a proud member of the Gen Y demographic group herself and has a young daughter, who figures prominently in her life decisions. 

Smith recently shared, “As a licensed REALTOR, I have noticed that younger buyers, millennials specifically, are ditching the city life to live in the suburbs where it’s potentially less expensive to purchase a home. I have also noticed that many younger buyers are opting for new construction homes over preexisting homes. This enables them to avoid bidding wars, absurd contingencies and paying well over asking price.   

“Housing inventory issues and rising construction costs leave millennials seeking homes in newly developed areas where they can potentially pay less for a home, settle down and start their families. This started before COVID struck. Millennials preferred homes that were sustainable and had easy access to good schools, shops, and restaurants. Above all, millennials just want the chance to have a piece of the ‘American Dream,’ and that begins with homeownership.” 

Mortgage Rates Are Inching Upward


In an effort to stem inflation, the Federal Reserve has nudged the prime rate upwards, in turn, lenders were prompted to increase in interest rates on home mortgages. How have these actions affected young homebuyers?

“These young homebuyers are now thinking twice about whether or not they can afford a home,” Smith said. “New and existing home sales are currently trending downward, and millennials who are first-time homebuyers are opting to wait until even higher rates decrease home prices later in the year.”

Her insight is consistent with recent news about this subject. According to a July (2022) story from the news service Axios, “The percentage of pending home sales that fell through in June shot up to a new post-pandemic high of 14.9%. This is a sign of how fast the housing market adjusted to the surge in mortgage rates that started in March. It signals the beginning of a return to sanity from the boom, where the balance of power is shifting back to homebuyers. Prices are likely to cool somewhat.”

“High interest rates also affect how much home they can afford and affects down payment assistance (DPA) programs,” Smith said. “Some DPA programs are ‘Silent Second Mortgages.’ This means they don’t require homebuyers to make a monthly payment, but they do have interest rates and require a paid-in-full status if the homeowner refinances or sells the home. 

“Most of the time, these programs have higher interest rates than average market rates, so it’s important to understand how the assistance can be applied to home buying costs so that there are no surprises at the closing table.” 

Grandparents hugging grandchildren on grey couch

 

A Home with a Support System?

For centuries, young families who are just starting out have sought support systems - immediate family or friends with kids of their own - to help them manage day-to-day demands. This has also been noted by experts who track current housing trends. Is this another important criterion for young homebuyers moving to suburban or smaller communities?

“I see more young buyers with small children wanting to explore homes near their support system,” Smith said. “In recent years I’ve noticed young buyers are more attracted to an area that boasts activities and an active lifestyle.

“NAR suggests that about 3.5% of young homebuyers between the ages of 23 and 41 said the primary reason for purchasing a home was to be closer to family, friends, or relatives. Most young buyers just want a home of their own, and being within proximity to restaurants, shops and enjoyable experiences is very important.” 

Is Sustainability in a Home Important to Young Buyers?

Baby boomers, who are the grandparents of this younger generation, have consistently favored homes that have a high degree of sustainability. They favored natural construction materials, such as brick and stone, because these were ecologically friendly, required less maintenance and offered the promise of lower energy costs.

How important is this issue of sustainability to younger homebuyers?

Smith’s response was immediate. “Without a doubt, young homebuyers prioritize sustainability in their home search. In fact, I’ve had quite a few clients wait until they’ve found the perfect ‘green home’ before they made a home purchase. 

“I believe young buyers are equally if not more conscious about green living. I just think their parents and grandparents are more financially secure and can make more of a statement in how they invest in sustainable housing.”
 

As the prices of new home construction return to more manageable levels and the inventory of new homes increases, now might be a good time to pursue that “American Dream.” If you want tips on saving money on maintenance and energy consumption, give us a shout.