Millennial sellers face challenges in selling
Millennials have bucked the stereotype of being indifferent toward homeownership by constituting the largest share of both homebuyers and sellers, according to the third annual Zillow Group Report on Consumer Housing Trends. However, millennial sellers were also most likely to make concessions, reduce their asking price, and otherwise face challenges.
The report looked at trends among renters, homebuyers, home sellers, and homeowners, surveying approximately 3,000 people from each group between April and June. It also polled 1,323 additional "tenured renters," who hadn't changed their primary residence in the past 12 months.
Of the respondents who sold a home in the previous 12 months, 31 percent were millennials – defined as ages 24 to 38. Fifty-three percent of all sellers were listing a home for the first time.
Sixty-one percent of sellers were trying to purchase another home at the same time they were selling their current residence. Millennials were most likely to be doing so, with 69 percent looking for another property to buy. Sixty-five percent of Generation Xers (ages 39 to 53) and 60 percent of baby boomers (ages 54 to 73) were doing the same.
Forty-one percent of sellers said they had an offer fall through before they were able to sell their home, but this share rose to 58 percent among millennials. Seventy-six percent of this generation changed their list price at least once, compared to 61 percent of sellers overall.
Eighty-three percent of sellers made concessions in order to finalize a sale, including 89 percent of millennials – 11 percentage points more than baby boomers. Those who made concessions were most willing to include appliances with the home (32 percent), lower the price, or make minor repairs or improvements (each 29 percent).
Millennials were most likely to have some regrets about their sale, with 86 percent saying they would have done something differently – 19 percentage points higher than the overall share. Twenty-nine percent said they would have listed their home at a different price.
"These seller challenges don't indicate that we're suddenly in a buyers' market – we don't expect market conditions to shift decidedly in favor of buyers until 2020 or later," said Svenja Gudell, chief economist at Zillow. "But buyers are certainly starting to balk at the rapid rise in prices and home values are starting to grow at a less frenetic pace. Whether this tilt in the balance is just a pause or the earliest signal of an emerging buyers' market will determine the extent to which buyers and sellers and their agent-partners recalibrate their strategies to adapt. The Zillow Group Report reveals that as hectic and stressful as the process can be, most sellers still go on to buy another house, and, if past is prelude, they'll find themselves back in the market as sellers in another decade."
Half of all sellers said maximizing profit was their most important goal. Thirty-eight percent wanted to be able to sell their home by a certain date.
Younger respondents were more likely to try selling their home without a real estate agent. Thirty-six percent of millennials went the "for sale by owner" route, compared to 26 percent of Gen Xers, 22 percent of baby boomers, and 19 percent of the Silent Generation (ages 74 and up).
Millennials accounted for 42 percent of homebuyers in the report. Generation Z (ages 18 to 23) was also starting to enter the market, although they made up just 3 percent of buyers. Forty-six percent of all buyers were purchasing their first home.
Neighborhood safety was the top concern among buyers, with 82 percent considering it to be important. Fifty-eight percent said they were looking for a home with a walkable neighborhood.
Fifty-eight percent of buyers said they compromised on their home choice to stay within their budget. Thirty-one percent gave up on some of their preferred home finishes, while 30 percent bought a smaller home and 29 percent bought a home that required a longer commute.
Younger buyers were more interested in being able to collect income from their home, with 36 percent of millennials and 35 percent of Generation Z saying it was important that they be able to rent out a portion of their home. Just 3 percent of the Silent Generation felt the same, along with 9 percent of baby boomers and 21 percent of Gen Xers.
Curiously, younger buyers were both more likely and less likely to exceed their budget. Twenty-seven percent of both millennials and Generation Z said they spent more than they expected on their home. However, the greater willingness to compromise on home features also made these buyers more likely to come in under budget. Twenty-six percent of Generation Z and 21 percent of millennials did so, compared to 20 percent of Gen Xers, 19 percent of the Silent Generation, and 16 percent of baby boomers.
Just over half of all buyers—52 percent—put down less than 20 percent of the purchase price. Older buyers were more likely to do so, with 62 percent of the Silent Generation and just 35 percent of millennials paying at least one-fifth of the purchase price.
The typical homeowner in the survey was 55 years old, and most were content where they were. Sixty-three percent of these respondents said they currently have no plans to sell their home.
Home equity was the largest financial asset among this group, with 52 percent of their personal wealth tied up in the home. Sixty-four percent said they see their property as a financial investment. Fifty-nine percent of homeowners were still paying off their mortgage, owing an average of 62 percent of the home's value.
Homeowners were making gradual improvements to their property, with the average respondent completing 1.7 projects in the past year. Nearly two-thirds—65 percent—said they planned to do at least one improvement in the next year.
Twenty-eight percent said they plan to improve the landscaping at their home, while 22 percent said they want to replace appliances. Twenty-one percent planned to do interior painting, while 17 percent said they will improve the bathroom.
The largest share of homeowners—34 percent—said the improvements they have completed cost between $1,000 and $5,000. Forty-five percent said they used cash to finance these projects, while 22 percent used savings and the same share used a credit card which they paid off right away.
The renters in the survey were more financially stressed, with a median income of $32,500 among tenured renters and $37,500 among other renters. This fell well below the median household income of $72,500 among homeowners, home buyers, and home sellers.
The typical renter spent 29 percent of their household income on their rent. Increases to the monthly rent helped drive mobility among renters, with 78 percent saying they had experienced a rent increase before their relocation. Sixty-seven percent said such an increase, typically amounting to $125 more per month, directly influenced their decision to move.
Nearly half of all renters—46 percent—said they considered buying a home instead of moving to another rental property. However, 37 percent said they liked the flexibility offered by renting while 31 percent said they didn't want to be tied to a mortgage.
Fifty-two percent of renters said they wouldn't be able to afford an unexpected expense of $1,000. By contrast, just 20 percent of homeowners said the same.
Thirty percent of renters said they ended up paying more for rent that they anticipated. Forty-six percent said the home they rented was outside the area they had originally considered.
Younger respondents were more likely to consider moving, and also more likely to keep renting. Thirty-two percent of Generation Z respondents said they were planning to relocate within a year, and 73 percent said they would move to another rental.
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