Young professionals and millennial homebuyers who are more than ready to finally own their own homes are shaking things up in the housing market thanks to a completely different view on homebuying than that of other generations. According to a Clever Real Estate survey published last month, nine in 10 millennial homebuyers is ready and willing to buy a home “sight unseen” just to get the keys in hand. And the idea of landing their “dream home” is so compelling that eight in 10 of those same millennials say they would “offer over asking price” to get it, with six in 10 saying paying more than $100,000 more than asking would be worth it.
This has real-world ramifications for real estate investors whether you are flipping properties to these eager-beaver buyers or renting. While millennial homebuyers are desperate to own, they also often have very different expectations about what homeownership will be like or what a “dream home” experience will entail. As a landlord, this will directly affect you as your tenant seeks to create the experience they were expecting upon moving in. As a fix-and-flip investor, it will be important to make sure that the “sight unseen” component in these new buyers is addressed in ways that enable them to feel as if they have experienced their new home even if they have never stepped foot in the door.
The Clever Real Estate analysts who wrote the report explain the phenomenon of sight-unseen buying this way: “A wave of first-time millennial homebuyers entered this explosive market eager to own homes and raise their families.” Much of this eagerness, as with so many things associated with this social-media-influenced generation, stems from visible evidence that others in the same generation are taking this leap. In fact, just over one-fourth of the respondents said that they want to buy a home in the next 12 months because “friends are buying homes,” although the prevailing rationale remains that a home is “a good investment” (46%). By comparison, 8 percent of baby boomers buying homes said they were doing so because their friends are, and about half cited “low interest rates” as the driving force behind the decision to buy in the next 12 months.
With housing inventories so low around the country, investors are certainly not having any difficulty moving their properties through the market if they wish to liquidate assets. The harder task is deciding whether it is worth it to retain a cash-flowing property indefinitely rather than selling while the market is white-hot.