Get ready for the next wave of home buyers — it’s going to be a whopper. The Millennials, that demographic group also known as Generation Y or the Echo Boomers, number 80.8 million, according to the U.S. Census Bureau. Accounting for immigration, the Bureau estimates that Millennials could number 92.9 million by 2025.
Millennials are challenging for home builders because they’re hard to define. The youngest are teenagers, the oldest are in their early 30s. Some want an unfettered, hip, urban lifestyle while others are looking for a more traditional home in which to raise a family. In short, there is no one buyer profile for this generation.
Take, for instance, Jerry Gloss’ children. The co-principal of KGA Studio Architects (previously known as Knudson Gloss Architects) in Louisville, Colo., has a 22-year-old and a 28-year-old. “The youngest is going, ‘Man, I’d love to live in a loft near downtown and be able to walk to the art gallery and the local beer joint,’” Gloss says. “The one who’s 28 has had a career for four or five years and is already talking about marriage and kids.”
Younger Millennials are more attracted to rental housing than for-sale housing, partly because of their youth and partly because mortgage financing is so difficult to obtain.
“Also, they’re not in a place where they should buy because most of them don’t know where they’re going to be five to seven years from now,” says John McIlwain, senior resident fellow for the Urban Land Institute in Washington, D.C.
Older Millennials (the married-with-children segment) are the most likely to buy townhomes or detached homes. However, they comprise only a small percentage of Generation Y, says market analyst Todd Zimmerman, co-managing director of Zimmerman/Volk Associates in Clinton, N.J. “The rest of the Millennials have seen their older siblings, parents, and friends burned, so the bloom is really off the rose,” Zimmerman says. “And whether they will return to homeownership in the way that predecessor generations did is anyone’s guess.”
He emphasizes that Millennials don’t want a suburban existence that makes them totally dependent on the automobile, like their Boomer parents. “Neighborhood is first — a walkable neighborhood. They will not compromise about that.” They’re also seeking authenticity, informal layouts, and space that functions well, not just square footage for its own sake. And they’re very much into cooking as entertainment (cooking outdoors is part of that trend).
But in some ways, Millennials and Baby Boomers are alike. “Boomers and Millennials are both at a life stage — empty nesters and just leaving the nest — where they value community for social and cultural interaction,” Zimmerman says. Like the Boomers did, Millennials are choosing to marry and have children late in life, though Millennials are delaying those events even longer. Rest assured, though, when this generation is ready to buy, they will have a tremendous impact on the housing market.
Compared to earlier generations, older Millennials are more pragmatic about their housing needs, says Vance Graham of Bassenian Lagoni Architects, Newport Beach, Calif. “The death of the living room has pretty much been announced,” says Graham. “Everyone is moving to the great room.” There is still demand for both informal and formal dining spaces, but the formal dining room must have some flexibility. “It could turn into a den, for instance, so its position in the home needs to work in multiple fashions,” he says.
The mudroom has seen a rebirth of sorts, Graham says. “It has different personalities,” says Graham. “It can be a home management space, a storage area for bulk items, or a true mudroom — a transition from outdoor activities into the house.” Second-floor bonus rooms are also making a comeback. “In terms of square footage, it takes the place of the living room. You’ve got the great room downstairs for family gatherings and a play area for the kids upstairs,” he says. In homes that are less than 2,200 square feet, Graham says the bonus room may become an optional bedroom or game room, depending on the buyer.
Gloss says Generation Y “will have some fun with what they choose to rent or buy initially, but when it comes time to make decisions about family, they’ll start focusing on their job location, the length of their commute, and where their kids will go to school. As they grow into marriage and children, they begin to understand that they can’t just borrow their way to prosperity.”
The American Dream isn’t over for Millennials, though it has been tempered by reality. “Millennials with families recognize that their move-up purchases will be limited by slowly increasing equity growth,” says Gloss. “They want an enduring investment.”
Somerville, Mass., is the next town over from Cambridge (home to Harvard University and the Massachusetts Institute of Technology) and is being redeveloped in a similar fashion. “It’s a microcosm of young, up-and-coming professionals — people who can’t be or don’t want to be in Boston, but want to live in an urban area that has a lot of different characteristics to it,” says Charles Aggouras of GFC Development, Weston, Mass.
One of GFC’s newest projects, Endicott Green, occupies an infill site in a neighborhood of existing three-story buildings. Architect Jim Zegowitz of the MZO Group, Stoneham, Mass., says the project is a modern interpretation of surrounding buildings. Zegowitz designed three stacked flats, ranging from 1,300 to 1,700 square feet, and incorporated a roof deck that residents could share. Located on a bus line, Endicott Green is also within walking distance of restaurants and other amenities.
“Most of our work is traditional New England style, so when the developer said he wanted something a little bit more modern and contemporary, that was music to my ears,” Zegowitz says. The building materials are as contemporary as the architecture: corrugated steel siding, composite panels, and glass-and-steel balcony railings. Energy-efficient appliances and systems were used throughout. “It’s the first LEED-certified residential project in Somerville,” Aggouras says.
Commanding an average price in the high $500,000s, Endicott Green sold out quickly last winter “when the market was worse than it is now,” says Zegowitz. The buyers are in their early 30s and have jobs in the biomedical and technology sectors.
The Parkway Series at Daybreak in South Jordan, Utah, targets both first-time buyers and empty nesters with three townhome designs. But to date, most of the buyers have been Millennials.
The Parkway Series is situated between an active-adult community and an office building. Both are components of Daybreak, a popular master-planned community in the Salt Lake Valley that incorporates a mix of uses, including residential, retail, and commercial. Urban Design Associates collaborated with Sego Homes and master developer Kennecott Land to design the product.
“The market’s soft, but we’re selling better than any other community in Daybreak and possibly the entire Salt Lake Valley,” says Wayne Corbridge, co-principal of Lindon, Utah-based Sego Homes.
The majority of buyers are in the 25 to 30 age group. “They’re attracted to our product because of the modern, innovative exterior elevations,” says Corbridge. “That really resonates with a Gen Y buyer who likes a fresh look.”
Architect Eric Osth, principal of Urban Design Associates in Pittsburgh, created a starter townhome, a larger plan for families, and a third design for move-downs who seek main-floor living. “Once we established the three typologies, we created three suits of ‘clothes’ for each unit, which gave us nine different elevations to work with,” says Osth. “And in each of those nine, we pushed the design to the corners of a style to be a little bit different.”
One of the elevations is more traditional while the others have a modern flair. “With all of them, we wanted to create a palette that could work together, either side by side or across the street from each other,” he says.
Buyers like the Parkway Series because it’s located in the heart of Daybreak, “so it’s sort of an urban setting in a suburban area,” Corbridge says. “It’s right next to some office buildings, one block from restaurants and neighborhood commercial buildings, and three blocks from a light-rail line that will begin service in August.” Daybreak’s amenities, which include walking and bike trails, parks, sports fields, swimming pools, and tennis courts, are another draw.
The townhomes range from 1,232 to 1,746 square feet and are priced from $159,900 to $189,900. To date, Sego has sold nine units. A total of 70 are planned. The smallest plan, known as the Double Sweet, is a 16-foot-wide townhome that has been especially popular. This design, with its dual master suites, works well for two singles rooming together.
As this article went to press, TRI Pointe Homes was closing the last of 95 homes at Sonoma at Woodbury, one of the villages within California’s Irvine Ranch master-planned community. That’s nothing short of remarkable, considering that Sonoma’s grand opening was held just a little over a year ago.
“The buyer profile is very ethnic, predominately Asian and Indian,” says Tom Mitchell, principal of Newport Beach, Calif.-based TRI Pointe Homes. “They’re predominately young professionals in their 30s.” But they’re not first-time buyers, Mitchell says, rather they’re move-ups from the Irvine area that want to make a transition from higher-density housing to more traditional detached homes.
Minimum lot conditions at Sonoma are 45 feet wide by 75 feet deep. “They certainly offer some enhanced exterior living space compared to attached product, but they’re not large lots,” he says. Woodbury’s amenities are a big attraction: not just the parks, open space, trails, and active recreation areas, but also the retail center. “For younger families, the Irvine schools are another huge draw,” says Mitchell.
Tom Veal, vice president of residential sales and marketing for Irvine Company Community Development, adds, “Most of our Gen Y buyers are young people who have either just begun or are going to start families, and are eager to live in a master-planned community with world-class schools, safe neighborhoods, and abundant amenities.”
Ranging from 2,345 to 2,785 square feet, the homes were designed by Bassenian Lagoni Architects. When sales started, prices ranged from the high $700,000s to the mid-$800,000s. “From there we had price appreciation and grew that pricing to the low $900,000s,” Mitchell says.
The floor plans feature expansive great rooms that incorporate a formal dining area, as well as island kitchens with seating for informal meals. Courtyards and “California rooms” provide that all-important outdoor entertaining space.