If there was ever an ideal generation for landlords, millennials would have to be it. The hallmark of their early adulthood was the Great Recession of the late 2000s, and while baby boomers have largely recovered, many of the millennials have not.
Like no other, this generation is facing high levels of student debt and a competitive job market. Those with college degrees no longer have the certainty of a good paying job waiting for them upon graduation. Although unemployment levels are near normal, younger people just out of school lack the experience or skills for higher paying positions.
As a consequence, the millennial generation will come to home ownership later in life, if at all. This up-and-coming generation doesn’t value home ownership as much as their parents and grandparents, and may simply regard it as just another option for wealth-building. They witnessed the financial devastation home ownership caused first-hand as their parents lost their homes and savings when values plummeted and jobs were lost.
When they do enter the housing market, their debt-to-income rations almost always dictate that they look for affordable, first-time housing. For those determined to own, many find that the housing stock in the affordable ranges doesn’t offer the perks to which they’re accustomed. And they’re not the do-it-yourself generation their grandparents were, which makes them more likely than those before them to rent for a lifetime.
This generation is the first raised with computers and 24/7 Internet access. Their electronics and devices are part and parcel of their lives. They need homes with plenty of electrical outlets for computers, chargers, and peripherals. Internet service must be affordable and dependable.
More than any other generation, this one is looking for sustainability in their lives, and energy efficiency dovetails into that value. Homes, whether they’re new, resale, or rentals, should promise value, especially when it comes to comfort. Low cooling and heating bills, sensible use of space and functional living are more in line with what millennials have in mind.
This generation also values living within a community that fosters wellness. According to American LIVES, a U.S. think tank, 80 percent of households making over $75,000 a year want their community or neighborhood to foster a healthy lifestyle, respect the environment, and promote well being.
Until they start having a family, millennials like to be close to urban centers or local amenities that appeal to this age cohort. The Urban Institute expects fewer people of this generation to marry, which suggests smaller, but fully functional townhomes or condos would be a good fit with a single person household or roommate situation.
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Individual needs and tastes will always vary within generations, but appealing to the majority of millennials requires focusing on the connectivity of the home, sensible use of space, and its functionality.
Since they don’t prioritize homes as nest eggs, investment property owners have an opportunity to target this market with sensible homes placed in locations that promote well being and personal involvement and enrichment.
Talk to one of our investment specialists to learn how JWB can help you earn passive income through long term real estate investing.