Mapping the Millennial Market in 2023
Ever since the term was coined circa 1987 to describe the generation born between 1981 and 1994, Millennials have received both praise and scorn for their definitive operating style. One thing is clear, however: they get what they want. And what do they really, really want in 2023, though hell should bar the way? Home Sweet Home ownership.
In 2020 and 2021, Gen Y was riding high as the largest cohort of homebuyers, according to the 2022 Profile of Home Buyers and Sellers report from the National Association of Realtors (NAR). But 2022 was a year of transition, including a dramatic spike in the average age of first-time buyers as well as repeat buyers-- the highest levels reported, according to the report. The typical first-time buyer was 36 years old in 2022, while the typical repeat buyer was a craggier 59. Both numbers are all-time highs. Millennials who previously topped the charts as first-time homebuyers only represented 14% of purchases in 2022, down from nearly 25% in 2021, according to U.S. News.
The usual culprits -- skyrocketing home prices, housing supply shortage, and decade-high mortgage rates -- are the primary reasons that Millennials appear to have lost their footing in the market. But are they fazed? Apparently not: a Bank of America survey shows that 67% of this group identify themselves as “likely” to buy a home by 2025. So the downturn of 2022 may be more of a reset than a true setback for the big-spending generation which will potentially become the wealthiest generation in history, primarily because they stand to inherit $68 trillion from their Boomer and early Gen X parents by 2030, according to Coldwell Banker Global Luxury Report, 2022. This means that by 2030, Millennials will hold five times more wealth than they possess today.
Culturally, Millennials distinguish themselves by being adaptable, and unbothered by the status markers of previous generations. These are the keys to navigating the 2023 Millennial market, whether you’re a chill digital native seeking to buy, or a seller seeking to attract this already-affluent and upwardly mobile population who will soon outnumber Boomers in the USA.
UNDERSTANDING THE SPLIT
Not all Millennials are created equal. There are M’s, and there are M+M’s: Millionaire Millennials. In 2019 according to Coldwell Banker, 618,000 American Millennials were millionaires. The majority of the M+Ms surveyed resided in California, where 61% showed investable assets between $500K - $1 million). New York City ran a close second, trailed by a smattering of M+Ms in Florida, Massachusetts, and Texas.
The heavily coastal distribution of Millennial millions is significant, since these are areas where inherited, intergenerational wealth persists. Based on a familial, dynastic template that’s easily a century old, the Big Orange and the Big Apple are predicted to endure as enclaves of old money which, in spite of Millennial breeziness, remains the blueprint for Gen Y wealth, present and future. A touchingly dorky expression of this lineage is that many Millennials live with their parents after graduation, squirreling away their six-figure salaries in tech and elsewhere as preparation for the big move following the big buy of a first home. Scooter, though all grown up and working for Goldman Sachs, may be willing to swallow his pride for a few years and sleep in his geeky boyhood bedroom while coolly banking what’s needed for that Manhattan or Malibu address to call his own.
As of 2019, according to Coldwell Banker, 92% of M+Ms had purchased property, with 80% of that total representing a single-family dwelling to the tune of $1.4 million. These M’s, like all M’s, appreciate home ownership as the key driver of wealth accumulation.
THE POSSIBLE, AND THE NOT-SO-MUCH
It’s true that Millennials are usually underwhelmed by the ostentatious excess of, say, the 1980s, although many are material girls and (gold)digger dudes in their own Kombucha-slurping way. The Millennial adjective of choice is “minimalist,” often used to describe fashion and décor choices, bearing in mind that a BMW 3 series maybe termed “minimalist” compared with a garishly supersized, blinged-out SUV. This preference maybe more practical than philosophical: the monster stretch Humvee may simply be too large to park comfortably in the culture-rich, densely populated areas where Millennials prefer to live.
Whether buying or selling, opportunity may present itself just slightly beyond the boundaries of the chic-est zipcodes-- think of the ultimate Millennial, Kim Kardashian, calling family-style Calabasas home instead of pretentious Bel Air. In 2022, Staten Island became the top spot in the nation for the sale and purchase of single-family homes, thank-you Pete Davidson. Cincinatti topped the national list of locations for the sale and purchase of attached homes. Both locales may lend themselves to rude remarks, but a skintight market makes any opening worth considering.
What M’s don’t want: the McMansions of yesteryear. So, a tidy, tasty property that’s light on square footage and amenities may fit the bill if it qualifies for what Millennials value above all else: community. They create it online, and they expect it in their residential choices. Key asset: neighborhood walkability, a key reason for the gentrification of once-ridiculed areas adjacent to sophisticated metropolitan centers (Red Hook, for instance).
FAST BREAK: WHEN MARKETING TO MILLENNIALS…
Lighten up on the home improvement angle. Millennials generally lean toward new construction, a preference that currently contributes to their diminished showing in the market since the building is down. These buyers aren’t likely to swing a sledgehammer, and they probably think a “stud detector” has nothing to do with load-bearing walls. Millennials may be willing to put funds toward renovation in the sense of an upgrade, but they’re not generally down-and-dirty DIY-ers. Really rough fixers will generally not appeal, since weekly cleaning service and mega-water-pressure are lifestyle non-negotiables for this demographic.
Remember that they are village people, meaning that they don’t thrive in isolation. Remember that this is the generation that defined itself by setting up laptop “offices” (Carrie Bradshaw) in coffee shops, even though they have WiFi (and coffee) at home. Proximity to throwback downtowns, cute corner cafes, Trader Joe’s (ground zero for M’s), yoga studios, family-run bakeries, and charmingly scuzzy bars are a huge plus. M’s often are dog-lovers, and quite a few have tots in strollers, so pedestrian-friendly areas with parks and trails are a strong selling point. Nowhere near a major mall? So not a big deal.