March 2, 2022

With many millennial and even Gen Z homebuyers flocking to the suburbs in the last couple years, you might be tempted to think they’re just like previous generations. Be careful – you don’t want to be lulled into thinking that you can just take a cookie-cutter approach to younger homebuyers. These generations have distinctive goals, worldviews and preferences that need to be considered when you’re building, designing and furnishing homes.

Here is a look at five of the most important distinctions for the millennial (born 1981-1996) and Gen Z (born 1997-2012) age groups as they relate to home buying.

Higher Economic Stress

Many older millennials know what economic stress is like – they graduated from college during one of the worst economic downturns of the last century, then endured another one about 10 years later. Average student debt spiked from $12,600 to $40,600 from 1992 to 2019 (in dollars adjusted to inflation) according to theSurvey of Consumer Finances. The primary reason: Tuition cost at a four-year school is 250% higher – adjusted for inflation – than it was in 1964, when the oldest baby boomers started attending college. Although college graduates’ earning power will likely increase over time, this still affects their ability to buy a home.

It’s no surprise there are trends like these, as described by Pew Research:

• It’s less likely millennials will live with a family of their own than previous generations did at this point in their life.
• Millennials are getting married later and are waiting longer to have kids.

That’s why we’re seeing many people 40 and younger re-evaluating homeownership. It might be on the back burner for them or not happen at all, which is different than prior generations.

Increased Diversity

Millennials were considered the most diverse generation in American history, according to Pew Research, untilGeneration Z came along. In fact, only 52% of Generation Z is non-Hispanic white, about 25% are Hispanic, 14% are Black, 6% are Asian, and 5% are another race or two or more races.

What does this mean for the housing industry? A report by the Urban Institute predicts almost 7 million net new homeowner households between 2020 and 2040. As a result, they believe we will see Hispanic homeowners increase by 4.8 million and homeowners of other races (primarily Asian) will go up by 2.7 million.

This can affect home design. For example, some builders are ensuring their homes reflect the cultural sensibilities of potential buyers by including features such as prayer rooms and taking into consideration design systems such as vastu shastra and feng shui.

Neighborhoods could see changes as well. A survey by Homes.com showed that 58% of prospective Gen Z buyers wanted to live in a neighborhood that is culturally diverse, and only 12% wanted to live in an area that is homogeneous.

Digital Dependence

Most millennials and just about all Gen Zers have always had smart phones and relied on digital solutions in nearly everything they do. These two generations are transforming the way the industry builds, designs, markets and remodels homes. This is driving more online sales for new homes and smart home implementation for new and remodeled dwellings, including rentals.

The answer isn’t to just make everything “smart,” however. For example, younger homeowners aren’t as enamored with high-tech security as older generations. Potential Gen Z buyers surveyed by Homes.com prioritized several features higher than smart technology:

• Outdoor entertainment space (patio, deck)
• Open interior design

The Importance of Sustainability

Sustainability is important to every generation, but it’s more vital in every aspect of life for millennials and Gen Z. Green/energy-efficient features were more important in new homes among Gen Z and millennials than any other generation, according to the National Association of Realtors’ 2021 Home Buyers and Sellers Generational Trends Report.

They want brands and products that are extensions of them. It is much more important than putting a sticker on a product and saying it is energy efficient. Sustainability is a big component of who they are and what they believe, and they want the brands to really reflect their views of the world.

Working remotely is also a factor millennials and Gen Z homebuyers are taking into account. For example, 36% of millennials would like a larger house because of the stay-at-home time spent during the pandemic, and a home office is essential or desirable to 74% of them, according to the What Homebuyers Really Want 2021survey by the National Association of Home Builders. Since younger generations face financial limitations – such as student loan debt – they’re going to look for homes that are flexible enough to give them ideal work-from-home spaces.

By Corey Ross, director of consumer and marketplace insights at Whirlpool Corp.

Photo credit: Smole/Adobe Stock