The New Buyers in Portland- Millennials
Millennials are categorized as anyone born between the early 1980’s and the late 1990’s. They span anywhere from 18-34 years old and are said to be the next big thing when speaking of real estate. The Millennials are thought to be the next wave of buyers that will be hitting the market soon. Last year alone the Millennials made up 32% of the real estate market and this year are estimated to be about the same according to the National Association of Realtors. This has sparked some new ways of doing business in Portland as Millennials are a breed of their own.
That being said, the question is how will this affect the local market and local realtors. The good news is that Millennials are very tech savvy and have done most of the research needed in order to purchase a property prior to contacting an agent. Research shows that Millennials also value the service Realtors provide and therefore will mostly be working with agents. The thoughts that technology would push agents out of the business are tabled for now. They lead busy lives and see the value in having an agent do the work for them. Although, it is said that they will be a hard generation to work with as they have high expectations and limited buying power. Most of this activity with Millennials is spurred from the expensive rental market, ability to qualify for a mortgage and the need to move out of their parents home. A majority of Millennials are over debted and under paid which makes for a hard combination when applying for a home mortgage.
One of the largest hurdles a more traditional agent will face with Millennials is communication. Millennials in general prefer to text rather than talk and much can be lost in translation when it comes to this. It is challenging for a more seasoned agent that is on the phone all the time to stop and think to text rather than call. It seems like this could be easier for all, but as mentioned before you lose lots of communication cues while texting. Setting up the communication expectations will be invaluable when working with Generation Y.
The National Association of Realtors claims that over 50% of Millennials use their smartphone to search for homes and out of that 26% of those purchased a home they found on their phone. Technology will be changing to accommodate this new generation of home buying. Home search apps and websites have to be cutting edge in order to impress Generation Y. Zillow predicts that Millennials will overtake the baby boomers when it comes to buying homes in the upcoming years as there is more of them. That being said, many agents and companies are working on keeping up with the tech game. New apps are hitting the market all the time, one in particular that has gained popularity for its ease of use and abundant information is Redfin.
Millennials are busy people, they work, play and some are even starting to settle down and have families. They see the value in working with an agent to help them navigate not necessarily the home search, but the contract and escrow period. This is where the value in using an agent is for Millennials, they already know what houses they want to see, how much the taxes are, how much the mortgage is, how long its been on the market and etc. They are savvy buyers who for the most part have done all the research for themselves prior to contacting an agent. It is important to them to have an agent they trust to advise and navigate the purchase process. Inspections, timelines, earnest money and so on are issues that Millennials appreciate knowledge and gentle guidance on.
Millennials expect great customer service and an agent that is available pretty much 24/7. They will not hesitate to email you in the middle of the night and expect an immediate response. This is the biggest purchase they have ever made and if their agent is not 100% reachable when needed they will most likely move onto the next one. This is why it is so important to be available and set the expectations right from the beginning. If you only reply to emails until 10 pm at night let them know, this will create a level of understanding between you.
Millennials have information at their fingertips about properties and agents. They are able and willing to look up online reviews of agents to get a feel of previous clients and their experiences. They tend to rely heavily on what is online, so it is important to make sure your website is up to date, profiles are current and reviews are glowing. Social media is also playing a large role with Millennials. Facebook, Twitter and Instagram are becoming popular platforms for realtors and buyers alike. Millennials have high expectations with social media and could possibly choose their agent based on their instagram account. Being relevant and having interestingly useful information to share is key. Otherwise, leave the social media game to the professionals. Having no page is better than having one that hasn’t been updated in awhile.
Affordability is very important to Millennials who have large amounts of student debt and are just getting started in the workforce. This is a tough time to be on a strict budget in Portland, but there are ways around this. Some may look for properties with a rental ability. Websites like airbnb.com allow homewoners to rent rooms in their home to travelers. It is kinda like a facebook for travelers. You are able to find rooms, hosts, prices and reviews all online before booking a place. This is allowing Millennials with limited resources to purchase and have some extra income while living the lifestyle they desire. According to NAR 25% of Millennials used gifted funds for a downpayment last year.
Another driving factor for Millennials purchasing real estate is the accessibility to stores, restaurants and public transportation. Millennials on tight budgets don't want to have to pay a car payment and are using the great public transportation we have here in Portland. There are entire communities that are based around this lifestyle choice, Transit Oriented Developments - check back next week for an article on this. The idea behind TOD’s is that everything is within walking distance from your residence. A small grocery store, restaurant, transportation and so on. TOD’s are becoming more popular in Portland for many reasons, one of which is the healthy lifestyle they promote. Walking and biking are a big part of the true Portland lifestyle. Being dependent on a car is not what living in the city is all about. There are many TOD’s in and around Portland and some new developments coming up in the next year. Block 75 is said to be completed in the summer of 2016 and will be a $35 million dollar project when all is said and done. It will boast underground parking, main floor retail and 10 stories of homes on the corner of NE Martin Luther King Blvd and NE Couch St.
Overall working with Millennials will be a big part of the real estate business over the next decade. They are the majority of the buyers and their needs and wants will mold the industry. Thinking outside of the box and being readily available via text and email will be key. Helping Millennials navigate contracts and escrow will also be a huge part of what they find valuable. They do not need to be sold on properties, by the time they call an agent they are already sold on the idea of homeownership. Finding the house is something they will work on in the middle of the night with their smartphones and laptops. The days of endless driving and property tours are over. Millennials are said to be decisive and demanding when it comes to buying homes, but who wouldn’t want that in a buyer? Real Estate in Portland is an ever changing being, sometimes beautiful and sometimes beastly. The Millennials will add a new flavor to the market and in all that is what it is all about. Change.
Written by Amanda Folkestad and Brian Porter