As event the most stalwart of the young, single, professional millennials approach the age where this generation starts to think about marriage and children (roughly 29), real estate analysts eagerly predict “the biggest housing boom in history” when these dedicated renters start settling down. But what will this unusual generation, compelled to stall the traditional “launch” from their parents’ homes by the Great Recession, unusually dedicated to an experienced-based, “YOLO” lifestyle, and burdened with near-crippling levels of historic student-loan debt, require in a home in order to take the leap and make the purchase?
The truth is that no one outside of millennials themselves, really knows. No one except millennials and maybe the attendees of Standard Management Company (SMC)’s annual “Magic of Real Estate” conference on October 29, 2019, that is. The morning of the conference, one session was entirely dedicated to a panel about millennials and housing hosted by, surprisingly enough, millennials active in the Southern California real estate market.
The moderator, William Schumann, is a property acquisition analyst at SMC. The panelists, Sam Shar, a sales partner with the Valerie Fitzgerald Group and a former Silicon Valley startup team member who developed a mobile app for the nightlife and entertainment scene in the Beverly Hills area, and Giovanni Lentini, a real estate agent with Rodeo Realty specializing in luxury properties, discussed tends they are seeing in millennial home preferences and selection as well as their personal preferences when it comes to buying a property – albeit not necessarily settling down!
“We’ve been known as the generation that has taken a little longer to get around to buying a house,” observed Schumann to open the discussion. Both panelists agreed, noting that their millennial clients are still largely seeking leases instead of opportunities to buy. However, naturally in light of the locale, these clients still have big housing budgets and expensive tastes to go with them.
Amenities guide both rental and buying decisions
“My clients often have budgets around $1 million,” observed Lentini, adding that most millennials will opt for less square footage if it means getting more and better amenities. “They want the most amenities they can get for their budget. I would say the basics would be gym, concierge, and a newer construction building,” he said.
Shar chimed in, “It is all about the experience for millennials, so the better the amenities, the better [they consider] the building.” He cited as an example a millennial client “with family money” developing a property in the Los Angeles area. The property boasts amenities millennials, specifically, are likely to enjoy: a parking lot for Bird scooters, a dog park, and rooftop community space. “Millennials want a place to hang out, have experiences, and enjoy life, so having a building with all these amenities and [a coffee shop] on the main floor is even better,” he said.
Lentini, who has properties in Texas as well as California, observed that this heavy focus on amenities holds true for millennials outside the Golden State who are still living in multifamily properties and urban settings. “Even millennials who have just graduated college tend to want the same amenities and lifestyle in Houston as they do in West Hollywood,” he said. “They gravitate toward nightlife, restaurants, and entertainment opportunities.”
Both agents agreed that millennials are more likely than not to want parking unless the residence is extremely close to their place of work. However, they said, “They are usually happy with one spot.”
When will millennial renters become buyers?
With most millennials still in the renting phase, Schumann wondered aloud if the generation, as a whole, would move toward buying. Shar said homeownership is “definitely on the horizon” for millennials, but although “everyone wants it, not everyone can afford it.” The discrepancy between what millennials can afford and what they want is a significant issue, he added.
“At present, millennials cannot necessarily live in the areas where they want to live, but they are still looking,” said Shar. “They want single-family, outdoor space if they have children, but they do not need a lot of square footage. They want smart space that feels big, has lots of natural light, and feels high end. If they have that, square footage is less important.”
Lentini noted that not all millennials are strapped for cash, however – especially not in California. “There are approximately 300,000 millionaire millennials in California, and the majority of them live in Silicon Valley,” he said. “They want a concierge, a pool, a gym, and convenience to everything.”
Schumann noted that in his experience with older, garden-style multifamily properties catering to millennials, the property owners had to make some changes to the amenities offered in order to bring in the younger residents. “Two things millennials say they are looking for is a dog-grooming service and a gym,” he said. “We have had to create dog parks [in some of our properties] to make them more competitive.”
The panel agreed that millennials will likely want to buy sooner rather than later and, for the most part, they will need financing to become homeowners. “You can’t ignore the next recession,” said Shar. “It’s inevitable. You can’t stand around and wait.” If millennials succumb to that pressure to buy, it could change the face of residential housing for decades to come and create a housing boom to rival all others.