Building a New Baseline

Millennials have new ideas on what they’re looking for in a luxury home

By Regina Ludes

In Cary, North Carolina, Tim Kinzie, CRS, noticed a paradigm shift in 2015 when more millennials began shopping for luxury

homes in his market. Still in their 20s, they came armed with entrepreneurial mindsets and strong financial foundations from their high-paying jobs in the tech or environmental industries. “They realized that real estate could help them build wealth for the long term while creating the lifestyle they want right now,” says Kinzie, a millennial and broker/owner of Montlor Luxury Realty.

Rather than buy the traditional starter home and live there for 15 years like their parents did, these affluent young buyers are purchasing luxury homes in their 20s and 30s. Born between 1981 and 1996, according to Pew Research, millennials are in their prime earning years. At 34%, they represent the largest group of homebuyers, according to the National Association of REALTORS^® (NAR).

Having watched their families struggle through two global recessions in 1991 and 2009, millennials have formed different concepts of financial security and homeownership, which influences their buying preferences today. They’re quick to take advantage of career opportunities and seek the best living environments with top-notch amenities and modern conveniences. Most important, they see real estate as a way to build wealth over the long term. CRS agents who understand this mindset can assist these buyers in finding the luxury home of their dreams.

Redefining luxury homeownership

Millennials’ concept of luxury is different than that of older generations. Opulence is out, while sleek, modern design is in. They want good value, too—one that offers a unique user experience. “It’s like comparing Tesla and Mercedes. They may both cost $100,000, but the driver experience is different,” Kinzie explains. They’re looking for a similar experience in their home.

Many of his millennial luxury buyers have the income from high-paying tech jobs to bypass the starter home, while others purchase a starter home as an investment property, using the income to finance the luxury home later. “Money is cheap. With six months of reserves, they can put almost nothing down,” Kinzie says. “They’ll buy a moderately priced home, then go crazy on customization.”

Forget fixing up an older home. They’re not interested in doing renovations, says Tim Hur, CRS, a broker with Point Honors and Associates, REALTORS^® in Duluth, Georgia, near Atlanta. They prefer new, custom-built homes with the latest high-tech features.

Hur says location is important to millennial luxury buyers in his Atlanta market but not in the same way it was for older buyers. Hot, trendy neighborhoods or a prestigious address appeal to them. Details like who designed the home and where to find the hottest new restaurant are important so they can present a certain image to their friends. For example, a young client Hur recently worked with eyed a particular neighborhood because he had learned that, “a certain favorite celebrity lived there. I want to live there, too.”

Amenities first

The luxury home is all about their unique lifestyle, says Amanda Howard, CRS, broker/owner with Sotheby’s International Realty in Huntsville, Alabama. “They want to live near where they work, have a nice view, entertain friends, go for hikes and have dinner at five-star restaurants,” Howard says.

Howard starts by asking older buyers, “What’s your price point?” With millennials, she asks about their hobbies and interests. “It helps me understand the way they live so I can help them find the best neighborhood for their desired lifestyle,” Howard explains. For example, someone may say they hate to cook but love to dine at restaurants. Howard knows to show them homes near fine dining establishments. It also helps determine possible layout needs, such as enclosed rooms for home offices and yoga studios versus open living spaces for entertaining.

They’re not looking for a large home, but one with better functionality. Open floor plans with spacious kitchens and an attractive outdoor space are ideal for entertaining and relaxing. Multifunctional spaces are also appealing, such as a den that can be used for exercising. While privacy and security are important, they’re more likely to ask whether alarms and cameras are installed than about the safety of the neighborhood, Howard says.

“They want to fit the home into their lifestyle and make sure it isn’t just a house with three bedrooms and a home office,” Howard says.

How CRS agents can help

CRS agents who work with these go-getters should be prepared to move quickly because millennial buyers make fast, fluid decisions. They will move at a moment’s notice to take advantage of opportunities elsewhere. Living in a home for less than five years is common because the stigma of selling and moving the family no longer exists.

Agents may do more listening than they do with older clients. “Millennials talk a lot, but they may not be clear about what they’re looking for,” Hur says. “They may say they want one thing, but realize later that it doesn’t fit their lifestyle.” Be prepared to ask lots of questions to clarify their housing desires. “Since this may be their first home purchase, they’ll look to you as a trusted advisor,” Hur says.

Check out the free recording “Tips for Marketing to Millennial Homebuyers” on CRS.com/catalogsearch.

Photo: iStock.com/Madmaxer