Changing forces are shaping
today’s real estate market

In an age when consumers go online to order groceries, download music and book plane tickets, it’s no surprise they do the same at the start of their house hunt.

That’s the route Julia, 30, and her husband took when planning their move from Atlanta to Manhattan last summer. Knowing they wanted a two‑to‑three-bedroom home with a doorman, washer/dryer and gym in the building, they plugged their needs into several real estate search engines and explored from afar. Once they got a feel for what was available and their move-out date became more of a reality, they contacted a real estate agent.

“Because we had not found the right fit, we asked him to step in and show us some things we may not have seen, or that were coming on the market soon and we wouldn’t have seen online,” Julia said.

This is not news to agents, who say clients often do extensive homework online before seeing physical properties. “You have a much more well-informed buyer,” said KJ Kohlmyer, an agent with Zephyr Real Estate in San Francisco and member of the National Association of Realtors®. “People do a lot of research.” In fact, 89 percent of prospective homebuyers use a mobile search engine at the beginning of their research, and throughout the process, according to a National Association of Realtors® study.

Is the American Dream Changing?

Go to school, marry, have kids, buy a house, work the same job for 30 years, retire—this was the baby boomer reality. Today’s first-time homebuyers aren’t settling down as quickly as their folks did, but buying a home is still front of mind.

When millennial first-time homebuyers knew they wanted to buy a home:

When I got married
When I was expecting a child
The day I realized my rent was the same as my mortgage
When I found a neighborhood I liked
I've always known I wanted to buy a home
the survey

Online house hunting is just one of the myriad forces shaping today’s housing market. Technological advances have encouraged the growth of apps and websites that equip consumers with more information. And social and economic changes are driving a desire for urban living, walkability and housing that accommodates a quick commute to work.

Married 18‑34‑year‑olds who own a home

Drag slider to see the change.

Though today’s house hunters are well-informed, a real estate professional can help them navigate the process more easily than they would on their own, Kohlmyer said. “A good agent can bring everything to the table,” he said. “There can be Byzantine-like local aspects that are not widely known.”

Today’s homebuyers value “experiences over things,” said Jonathan Miller, president and chief executive of Miller Samuel, a real estate appraiser and consulting firm. “They are in love with the new urbanism trend that has been in place since the financial crisis began. Urban living, walkability and close-knit communities define the experience many in this generation aspire to be part of.”

Taking Their Time

Today’s first‑time millennial homebuyers have taken their time to figure out where they fit in the world before settling down. This mentality affects all their choices—from when/if they marry to their job choices to how they are saving for the future.

How millennials rate their financial readiness for buying a home:

  • Strong
  • Comfortable
  • Adequate
  • Needs improvement
  • Not ready
28 33 24 11 3
the survey

Homebuyers today are seeking both urban conveniences and a sense of community—but price pressures and a desire for more living space are motivating them to look outside cities for this holistic living experience. Home prices in the Boston metro area have increased from $389,000 to $421,000 in two years. It’s a similar story in Denver, where prices jumped from $310,000 to $384,000.

“Beginning in 2015, we began to observe a flight to the suburbs in urban markets as this generation grew impatient with falling affordability,” Miller said. “Renters are becoming first-time buyers, and trade-up buyers are being drawn to the suburbs.”

These complex dynamics are driving changes to suburban enclaves that were once entirely dominated by automobiles and set apart from downtown areas and the workplace. Many suburbs are reducing auto dependence by introducing retail and office spaces into residential neighborhoods; rerouting traffic patterns; constructing sidewalks and trails; and incorporating more public transit options.

The Boom is Coming

With prime homebuying years between ages 25‑45, millennials (18‑34) are the largest generation in history. As they mature and accumulate wealth, a boom to the market could very well be on its way.

First‑time millennial homebuyers ranked which economic and social factors will most affect their purchase of a home:

All respondents Millenial First‑time Homebuyers
Savings 42 56
Interest rates 42 44
Career path 32 46
Family size 27 37
Student loan / debt 15 25
Stock market 10 10
Politics 7 10
the survey

Suburbs are increasingly offering conveniences and the sense of community that goes with having retail outlets and restaurants nearby. A National Association of Realtors® survey found that 58 percent of respondents favor walkable, mixed-use neighborhoods over those that require more driving between home, work and recreation.

New, multi-use, pedestrian-friendly communities are popping up in places like Waverly in Charlotte, N.C., which offers 400 apartments and 150 single-family and townhomes anchored by a 40,000 square-foot grocery store and a 250,000 square-foot retail complex.

Who's Buying Homes?

34% Millenials (18‑36)
Hover over the groups to see their percentage.
Tap the groups to see their percentage.

Retrofitted older suburbs are also being transformed. Mashpee Commons in Massachusetts is a mixed-use, walkable community that was built on the site of a former shopping center.

The Agent is Still Key

Despite our technology‑centric society, a human touch is still very much needed.

How first-time homebuyers aged 18‑34 largely prefer to communicate with a real‑estate agent:

In person
the survey

Sonia, 31, and her husband decided to buy a home outside New York City last year. Since they both worked in Manhattan, they were looking for areas that were easily accessible, and a town that was walkable. They settled in picturesque Pound Ridge, minutes from Stamford, CT.

“We were looking for towns that had an upstate feel but were easily accessible to New York City,” she said.

It’s clear that financial necessity and love of urban conveniences are driving millennials to the suburbs. “This generation is redefining the traditional suburban housing market,” Miller said. “And they are just getting started. Pent-up demand will likely be unleashed on the suburbs over the coming years.”