A few key trends may hold the answers and provide some important insights for your business. For one, both millennials and baby boomers could be your biggest buyers.
Interesting trends are taking shape across home buyers. For one thing, both millennials and baby boomers will be big buyers. No longer is the sweet spot only in the middle-aged target. As more 25 to 34 year olds enter the job market and start earning higher salaries (a healthy $75,000-plus according to the Bureau of Labor Statistics), millennials are poised to take the housing market by storm. On the other hand, now that the market is picking up, baby boomers are not staying put like they used to. They are carving out unique empty-nester lifestyles in new and different places.
First, here’s what you should know about millennials:
Many of those born between 1980 and the late 1990s are expected to buy their first home this year — and likely not a traditional starter home. As a result of paid-off loans and higher-paying jobs, this group is opting for more than a condo or townhome. In fact, this group may be in a position to spend more on a home than you might think. According to a Fortune.com article, generally speaking today, “the typical earner can expect to see her wages grow the most between the ages of 25 and 35, by an average 38%.” This positive income momentum can make a millennial buyer more confident.
Their geographic preference? Midwestern suburbs and medium-sized cities. As it happens, suburban and smaller city living appeals to baby boomers and millennials, alike. Millennials, especially, are focused on safety, privacy and more space.
So what about folks at the other end of the life-stage spectrum?
Here’s what you should know about baby boomers.
This group, the oldest of whom are entering their late 60s, are also looking to move as they reach their retirement years, according to Jonathan Smoke, chief economist for realtor.com.
Baby boomers’ participation in the housing market has dwindled over the last several years, as many have been reluctant to sell and have opted instead to wait for their homes to recover the value they lost due to the downturn in the housing market.
Interestingly, many boomers are opting not to move to traditional retirement hot spots like Arizona and Florida and are choosing instead to move closer to family or in proximity to their favorite activities, such as music, theater and nature. So it’s become even more individualized, and more important than ever to know your boomer buyers.
Other trends that will influence buyers in 2017:
Slowly rising prices.
Experts say the price climb will be slow but steady, as demand is stronger now than it was at this time last year. According to a recent article on Forbes.com, Redfin predicts that median home sale prices will gain 5.3% in 2017 compared to 2016. In addition, Zillow is forecasting more conservatively the median home value to rise 3.2% from $192,500 between November 2016 to November 2017.
Higher rates. More credit.
Although rates may rise, mortgage credit will likely be more widely available due to slightly loosening lending standards. Fannie Mae and Freddie Mac will begin backing larger mortgages for the first time in over a decade — up to $424,100 — making it easier for buyers in expensive markets to finance their purchases.
Medium-size cities continue to rise.
Millennials, or just younger adults in general, are becoming attracted to medium-sized cities, which may not have the same professional opportunities as their larger counterparts, but do provide housing affordability. Redfin.com reports that cities like Raleigh, NC, and Fort Collins, CO, have seen building permit issuance soar over the past six years as they attract young adults seeking affordable mortgage payments and lower asking prices. This trend is expected to continue throughout 2017.
As you stay in step with the ever-evolving marketplace, leveraging trends and insights such as these will help make 2017 your most successful year ever.
For more helpful tips, visit the American Home Shield® Home Matters blog