Should You Be Marketing for Millennials?

If you listen to the big real estate pundits, in fact, if you listen to our own weekly Power Hour, that title looks like a stupid question.  Of course you should be marketing to Millennials!  They are the next great home buying wave!  They represent something like 20% of the American population!  Of course you should be marketing to them!

Well . . . . maybe.

There are some realities about Millennial home buyers – born between roughly 1985 and 2000 – that are often ignored, realities that could inform your decision about pursuing them.  Here are two:

  • While high tech jobs and massive starting salaries do come to this group, the vast majority exit college and enter jobs paying near subsistence wages.  There are a whole lotta Masters Degrees working at Starbucks and the Verizon Store.  But that’s not all;  in most industries, entry level salaries have not kept pace with the cost of living.  In brief, Millennials often don’t have the income they would need to qualify for the entry level home.
  • Millennials and debt seem to go together.  For the college grads, it’s student loans – that $20,000 to $40,000 noose that hampers the creditworthiness of these home buyers.  For others it is the over use of credit cards to finance a lifestyle that is bigger than their entry level salaries.  Between lower income and higher debt, many Millennials present significant qualification challenges.

But so what?  We thrive on challenges!  Nobody is better at solving these kinds of problems than we are, right?  Yes, right, and with dozens of new financing instruments and special programs to help first time buyers, we have the tools in our arsenal.  But there is a third reality that just flattens home buying possibility for  many.  It is rapidly rising home values.

Coupled with the realities of lower salaries and higher debt, the affordability crisis is pushing home ownership out of the reach of many Millennial buyers . . . in fact of many buyers of any generation.  In California today there are many markets where fewer than 28% of the population makes an income sufficient to qualify for a mortgage on the median priced home.  It is a trend that shows no signs of reversing and that is spreading across the country.

My advice to you is to think, focus and aim before you fire your marketing at Millennial home buyers.  Are you in a marketplace where young home buyers can afford to buy?  Do you have inventory – condos or single family homes – that price somewhere in the $150,000 – $250,000 range?  Are you in a location where there are good jobs for college educated young people?

When I consider those questions, I immediately think of Greensboro, North Carolina, home of Jack Bailey and Steve Vincent, two Help-U-Sell brokers doing a great job of putting young people into their first homes.  It is a marketplace where housing is relatively inexpensive: the median sale price is still below $200,000.  It is also a market where employers are expanding, so there are jobs.  This may be a great place to seek out Millennials.

But then I consider David Bartels in Westlake Village, CA.  There, the median sale price is $775,000.  Yes there are some lower priced areas close by, and there are even lower priced condos, but prices still put those properties out of the reach of most Millennials.  You’d think Ventura County with its proximity to the employment mecca of Los Angeles would be a perfect Millennial market . . . but affordability creates huge headaches for this group here (despite what I wrote about Millennials in your blog, David).

Look at your market place and make a logical decision about whether or not to target Millennials.  Consider home prices, employment opportunities and typical starting salaries.  You may discover that it’s not worth pursuing this group at all . . . despite what the pundits may say!

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