How the Millennial Homeowner Invests


With the potential in homeownership for millennials in the current market climate established, a small segment of the generation is already one step ahead of us. The older end of the generation’s age spectrum is reaching their mid-thirties, and many have finally achieved a financial stability allowing for homeownership. The question that comes next, now that the mythical millennial homebuyer is becoming a reality, is how exactly those millennials are investing in their homes.

One investment priority that shouldn’t be surprising to those familiar with the social media generation is the customizability of the home. What may surprise, however, is the long-term practicality of this priority beyond self-expression. According to Realtor Magazine, millennial homebuyers are shirking the traditional home with one-purpose luxury rooms in favor more flexible spaces like studio units with an open floor plan. The need for adaptability fostered by young adult years spent moving for the right job opportunity develops into a need for transformable space. An extra room could become an office, a play room, a “getaway” room for yoga or guitar practice, or even a spare bedroom for guests or an eventual child. Further, the ability to shape a home to any need appeals to the millennial planning ahead for the eventual home sale; for how much it appeals to today’s 30-somethings, imagine the appeal to the next generation of homebuyers looking to adapt a home to future technological advancements.

On a similar, future-focused token, millennial homeowners have already made it clear that their homes had better be green – and that they’re willing to invest for that matter. According to a study from the National Association of realtors, 10% of the 34 and younger age group chose their home for energy efficiency reasons. The reasoning behind this priority is twofold. The first and most obvious is the tendency of the younger generation to actively support sustainability causes, having seen crises from the ozone layer hole to the BP oil spill as they came of age. For a generation more focused on the future than any before, the focus on a greener world for future generations comes from a place of paranoia as much as it does from genuine altruism. Beyond personal factors, though, are the bottom-line kickbacks afforded by green upgrades. Young homebuyers cite reduced utility, landscaping, interior improvement, and overall repair costs associated with modern efficiency technology as the reasoning behind investing in modern appliances and other home features.

Both of those priorities underline an interesting trend among the millennials, traditionally seen as thrifty – a lot of them are building their own homes. A recent Bloomberg business article cited major builders like Tri Pointe Homes and D. R. Horton as having noted the prevalence of the newly constructed starter home trend. Without traditionally lucrative features like expansive entertainment rooms or huge backyards, many of these homes carry rather affordable price tags of $200,000 or under – a perfect initial investment for a millennial homeowner to upgrade. Out of the gate, many of these homes come equipped with smart technology and modular upgradeability options with the tradeoff of square meterage; and for a generation used to sharing space, that sacrifice barely seems like a setback at all.

According to data from Curbed.com, 35% of new homebuyers in 2015 were millennials. Considering that the median age of the generation is 25, it’s fair to say that a wave of millennial homeowners is in our future. Realtors and home building firms alike are taking notice, and the new normal is starting to form – and it looks rather formless as of right now. In an ever-changing world, millennials want to change with the tides while still accumulating equity and raising a family in a smaller, but smarter home.