Young home buyers are a tough sell. Generation Y is known for being smart, picky, and design savvy but often short on cash. It takes more than a house with the latest technology or modern design to entice them out of their rental apartments, shared group homes, or even their parents’ basements. Wooing these persnickety customers is crucial for production builders, since the demographic group is projected to swell to 92 million by 2020. Builders should think carefully about how they design and market houses to young buyers, says demographic expert Susan Yashinsky, vice president of Michigan-based Sphere Trending. The company recently worked with production builder Clayton Homes to provide demographic research and design concepts for a demonstration home geared toward millennials.
More than any other group, post-recession first-time buyers are price conscious, due to the soaring cost of housing and a shortage of financing, Yashinsky notes. Many are underemployed with a record amount of student debt that will take years or even decades to pay off. “They’re all about making choices,” she says. “They want to live large, but are also pretty much going back to an era where people could do more with less.”
Although this generation is realistic about its economic outlook, these buyers won’t skimp on features that are important to them. Here are some insights into pleasing millennials without breaking the bank:
—They love “drop zones” near the front door for stashing and charging their phones and other electronic gear.
—They don’t think of the kitchen as solely for cooking, eating, and socializing. “It’s morphing into a community hub,” says Yashinsky. To please young buyers, place the kitchen close to the front of house and provide enough space for two cooks. Add touches such as built-in shelves or chalkboard paint on cabinets for an easy message center. Builders and manufacturers are reaching out to Gen Y buyers. A case in point is GE's new Artistry line of appliances designed with young homeowners' budget and taste in mind.
—Their laptops and other electronic devices are central to entertaining, not something to be stowed away when guests arrive. Have a table, counter, or other dedicated space for these electronics to be front and center. —Exciting exterior details such as an unexpected roofline, a pop of color, or unorthodox material grab young customers' attention. For example, the Concept House from modular builder Clayton Homes has a roofline with an acceleration that makes it stand out from other manufactured housing, Yashinsky says.
—Homes with two or more master suites, even if they are small, are attractive to young buyers who are looking to rent out a space to a friend or buy together as roommates.
—Because they can be overwhelmed by the home buying process, be prepared to guide young buyers through the steps and answer their questions. Some builders offer comparison shopping guides that empower first-time buyers to ask the right questions in the home buying search. “Show them you’re a partner with them,” says marketing expert Mollie Elkman of Philadelphia-based Group Two. “Encourage them to compare you to other companies and to resales."
—Sphere Trending has found that consumers in every age group will pay extra for energy-efficient features that save money on utility bills. “They understand they get it back in their pocketbook,” says Yashinsky.
—In terms of marketing materials, keep it simple but bold. Young adults, raised on smartphones and iPads, are motivated by strong images. In fact, after years of viewing computers and phone screens, they don’t process visual material the way older American do. This means they can quickly scan marketing material and absorb key points but they require strong graphics to draw them in.
Despite being criticized for a lack of focus, “if you grab their attention they will absorb more on a page than an older person,” Yashinsky says. To do this, employ catchy headlines, quick hits of information, and text that is formatted for easy scanning.
—Due to the uncertain economy, homeowners of all ages are staying put longer now than in the past—about 16 years on average compared with 10 years pre-recession, Yashinsky says. Because of this, homes that are flexible and can grow and change with a family are in demand. Clayton Homes vice president Mike Duncan likes flexible bonus rooms and sliding doors that open or close off a space when needed. “The rooms have to morph as the owners’ lives change—from a game room to a nursery, to a TV room,” he says.
—Young customers may not realize that with a low interest rate, they can pay the same or even less than what they pay for rent for a new home. Explain in real numbers how rising interest rates will negatively affect their buying power. “Breaking it down to the monthly payment is really important,“ Elkman says. “Compare it to renting.”