One of the most coveted demographics in the housing industry right now is the millennial generation, which is poised to change the home-buying experience as we know it.
Having struggled with huge student debt, so-so employment and later-in-life household formation, many millennials are now at the stage where they are actively pursuing home ownership. In the United States, forecasters are estimating that millennials will buy upwards of 10 million homes over the next 10 years.
Is Canada likely to follow that trend? The reality is there is a huge millennial population that is set to drive demand in the housing market.
What millennials want
Recent studies and trends demonstrate that millennial ideals vastly differ from the previous generation. As a result, this dynamic demographic has started triggering a shift in the home-purchasing process.
Information today is more readily available than ever before. Buyers can do their homework, thoroughly, before physically touring a home or visiting a sales centre.
Communicating via text or apps has become the most convenient and preferred way of interacting, allowing buyers to speak directly to sales contacts before committing precious time to an in-person conversation.
Additionally, younger buyers are choosing function over size. They want value and are price conscious.
Playing catch up
While all of these new tastes and expectations make sense, the housing industry is taking time to catch up, which poses the question: What are builders doing to accommodate these new demands and how can millennial buyers help the industry to adapt to their needs?
Unfortunately, when it comes to housing, one of the most significant issues facing millennials (and others) is affordability.
We have all heard about price escalations in Toronto and Vancouver. I recently read in an article that 40-foot-wide lots are selling in the Greater Toronto Area for $800,000 to $1.2 million — and that’s just the dirt — talk about affordability issues.
In response to these rising prices, we’ve seen an increase in the demand for multi-generational homes and co-ownership agreements. These options give buyers the opportunity to split the cost of a mortgage with another party. Not only does this lighten the homeowner’s financial commitment, options like these allow buyers to get more space and function out of their investment, and that means more value.
Communicating with buyers
Another area of struggle seems to be communication. While the housing industry has started to implement newer communication methods such as easily accessible apps like Zillow and Homicity, as well as virtual home tours, videos, a larger web presence and other digital platforms, builders are still struggling to engage.
A possible reason for this is lack of feedback. While builders tend to be laggards in technology, they are starting to experiment with it. At Cardel, we are asking buyers what information they want and how they want to receive it. In order for the housing market to deliver a progressive home-buying experience, builders need real feedback.
Another difference between this generation and the previous one is the desire to partner. Millennials are privy to so much information, they no longer rely on salespeople the same way their parents had to.
Losing the personal touch
Although equipping buyers with the knowledge and guidance earlier in the home-buying process can benefit both the builder and the buyer, it can also hinder it. Communicating through digital means before experiencing a community or touring a home first-hand can lead to premature disqualification. Buyers are able to qualify or disqualify themselves online before entering a sales centre.
Unfortunately, this inhibits builders from connecting with potential customers and negates the opportunity to negotiate or justify price points. Even with technology’s ever-changing advancements, digital tools aren’t able to offer the same value as an in-person expert.
I still believe that building a relationship between the builder and buyer is vital for a positive home-buying experience. Through face-to-face interactions, a salesperson can tailor the information they provide to the direct needs of the buyer. Real time interaction also minimizes the possibility of miscommunication.
At the end of the day, builders want to appeal to the needs of buyers and, right now, the future of home-buying rests in the hands of millennials. If both sides can find ways to continually improve communication and work towards making the buying process fun, informative and approachable, I truly think we can start to turn this market around.