It’s finally here! The long-awaited Millennial Generation has finally entered the residential real estate market. After several years of talking heads and economists decrying the fact that Millennial buyers were not purchasing homes, the data has finally shifted. According to a November 2018 report by Realtor.com, Millennials surpassed Generation X as having the largest share of new mortgage dollars.
Even though Millennials have joined the home buying market, they are not flocking to the new home construction market in as great a number as hoped. There are several reasons why this is the case. The first is cost. Home builders are being pressured by labor and material shortages which is driving up the cost of some new construction homes. The second is availability. There is such a strong demand for new housing that many Millennials are just getting boxed out. The third is a bit more complicated and something that home builders really need to examine. It is reputation.
From 2012 – 2015, all of the major real estate trade organizations and research firms including Pew Research Center, NAHB, and the Urban Institute published their thoughts as to why Millennials were not purchasing homes. Three top take-aways always emerged: delay in marriage which has created a wealth gap, high student loan debt, and the impacts of the Great Recession.
The Great Recession was a pivotal moment in the lives of everyone. However, it impacted Millennials in a manner that has clearly been underestimated. Millennials blame certain industries and individuals for the financial collapse, including home builders.
Home builders were once immune from too much public scrutiny because they were providing a valuable service and product to the marketplace. That has changed. Only 46% of Americans have a positive review of the real estate industry as a whole and that number is much lower among Millennials. The industry’s reputation is further damaged by review platforms on Google, Facebook, Yelp, Houzz, and others which exacerbate sentiment.
The only way home builders are going to shift the balance and improve their reputation is through CSR. CSR (Corporate Social Responsibility) is not a new idea or trend. It is something that many companies have done for years. However, now it has to be front and center. Home builders need to be willing to take a stand on certain issues that its leadership feel important. Whether it be equal pay for women, LGBTQ rights, tackling homelessness, etc. The list is endless. Taking a stand is what matters, but a home builder has to be consistent in that stand. You can’t drop in and out of issues or only speak up when there’s a particular day or month that is meaningful.
Millennials want to see and will buy from companies that are helping move the country forward. This generation tends to be focused on brands that are making an impact in the world. It does not have to be a highly-politicized endeavor – it just has to be meaningful. A donation to a local youth soccer camp is not going to do it. Millennials want the brands that they buy from to work diligently for their money. That means regaining their trust.