Home builders predict as millennials enter the housing market, homes will get a little smaller, energy efficient appliances and laundry rooms will be essential, and home technology will become increasingly important. Their predictions are based on two surveys conducted by the National Association of Home Builders – one asking home builders what features they are most likely to include in a typical new home this year, and one asking millennials what features are most likely to affect their home buying decisions.
Four of 10 top features mentioned by home builders have to do with energy efficiency: low-E windows, Energy Star-rated appliances and windows and programmable thermostats. The top features are a master bedroom walk-in closet and a separate laundry room.
Least likely features are high-end outdoor kitchens with plumbing and appliances, and two-story foyers and family rooms because these features rate the lowest in their millennial survey. "Consumers don't like them anymore, so builders aren't going to build them," said NAHB assistant vice president of research Rose Quint. "Builders will build whatever demand calls out for."
When NAHB asked millennials what features fill their "most-wanted" shopping list, a separate laundry room topped the list, with 55 percent responding they wouldn't buy a new home that didn't have one. Storage, linen closets, a walk-in pantry and garage storage made the top 10, along with Energy Star certifications. Respondents were willing to pay 2-3 percent more for energy efficiency, as long as they can see a return on their power bills.
If they can't quite afford that first home, respondents said they would sacrifice extra finished space or drive a little farther to work, shops and schools, but are unwilling to compromise with less expensive materials.
The NAHB report indicates an International Builders' Show on home trends and home preferences, Jill Waage, editorial director for home content at Better Homes and Gardens, noted millennials enjoy the outdoors and are tech savvy. They opt for less expensive, low-maintenance choices like a brightly painted front door, strings of garden lights, and landscaping that needs less watering and mowing, and larger patios. They seek ways to control their heating, air-conditioning, security, lighting, and electronics like televisions and sound systems, from their phones.
"They want to use their brains for other things, not for remembering whether they adjusted the heat or closed the garage door," said Waage.
According to the Demand Institute, which tracks consumer demand across industries, countries and markets, over the next five years 8.3 million new millennial households will form nationwide. A survey conducted by the institute of more than 1,000 millennial households found 75 percent of millennials believe homeownership is an important long-term goal and 73 percent believe ownership is an excellent investment. Seventy-four percent of those surveyed plan to move over the next five years, with the top reason being need for better housing – 48 percent prefer to own, not rent.
"Although millennials are delaying household formation, including marriage and homeownership, studies continue to show their desire to own a home remains strong," said Chris Isaacson, president of the Silicon Valley Association of REALTORS®. "Millennials are optimistic about homeownership and future home prices. It is very likely we will see the share of first-time home buyers grow, especially with the latest move by Fannie Mae and Freddie Mac to lower down payments to 3 percent for first-time home buyers."
The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.
The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.
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