The housing market, also known as the real estate market, brings together different stakeholders. They’re homeowners who are selling their properties, the renters, the real estate investors who buy and sell properties solely for investment purposes, the contractors, the renovators, and the real estate brokers who act as facilitators in the process of buying or selling a property.
The main determinants of demand in the housing market are related to demographic factors. However, factors such as income, availability of credit, and consumer preferences are also important. Demographic factors include the size of the market because of the more the consumers, the higher the demand. Additionally, the rate of marriages, divorces, and deaths, which provide an idea of the population growth.
Younger Millennials more often rent as they begin their careers. However, the generational shift in home buying is just getting underway. Some experts speculate there will be more disruption in the next five years as Millennial home buying accelerates.
As Millennials enter the housing market in greater numbers, they’re approaching it in a much different way than previous generations of home buyers.
Technology Heavily Influences The Housing Market
Millennials are dedicated to their devices, and for this group, technology plays a central role in home buying. Moreover, most Millennials search online to get information about homes and home buying.
Millennials are likely to use their mobile device in their home buying search than older Baby Boomers. About 58% of Millennials find the home they want to buy via their smartphone or tablet. This is directly affecting the way real estate agents and brokers approach their role in the buying process.
Digital advances have transformed how real estate is done. Ten years ago, real estate agents were valued for information. Now, the true value of a real estate agent is through their negotiation skills, relationships with other brokers. And their ability to keep up with the times with marketing strategies and processes.
Communicating With Realtors
Millennials also differ from previous generations in terms of how they use tech to communicate with realtors. They prefer the majority of communication to be via text message.
Some agents suggest that Millennials utilize texts to express interest in a property, schedule appointments and ask questions. Phone calls are usually reserved for more urgent or pressing concerns. Texting represents the most immediate back-and-forth line of communication.
Kenyan agents are adapting to this demand for electronic communication, with 90% of agents communicating via text and 94% using email. Another 36% chat with clients through instant messaging.
Another digital impact is in how agents list homes. In addition, tech-savvy Millennials are leading agents and brokers to introduce things like videos. Videos give the audience a broader view of the property, communication, and location, helping agents get in front of potential buyers.
Millennials’ Specific Preferences for Homes
Millennials want homes, but they don’t just want any home. Some Millennial homeowners prefer the suburbs to the big city or rural areas. And they’re increasingly skipping the starter home and trading up to something bigger and more expensive.
The rental market has played a part in pushing more Millennials toward the suburbs. This is caused by rent prices increasing month over month in major towns in Kenya especially Nairobi. Year-over-year, rent prices are up in large towns in the country.
All across the country, rent prices are generally increasing in urban areas. This pointing to the revitalization and redevelopment efforts that have given many cities a facelift. While that means more walkable urban centres with restaurants, nightlife, and access to green areas. It has resulted in premium pricing for in-demand housing. As a result, many cost-conscious Millennials are choosing to live in the outskirts of a city or the suburbs.
Increasing Incomes
At the same time, Millennial incomes are increasing. While Millennials make less on average than their parents, hourly wages have risen steadily since 2011. Those working in professional sectors earn an average hourly wage of sh50,000. As a result, they’re positioned to afford larger, more expensive homes versus a smaller fixer-upper.
Basically Millennials want less hassle, hence, move-in ready properties are in high demand.
The Bottom Line
Millennials have left a lasting impression on the housing market. And more evolutions may be on the way as the next generation of home buyers enters the fight.
Focusing on the positive impacts created by Millennials is key to keeping that evolution in perspective. An emphasis on technology, for example, may result in a streamlined, more efficient home buying process. And more Millennials moving to the suburbs could help balance out the effects of rising housing prices in urban areas.
The market will adapt and go through changes as it always does and that just means a different market, not necessarily a bad one.