By Riki Markowitz
The least surprising thing you will hear today is that one of the hardest parts of being a real estate agent is finding clients. To help ease the burden, professional organizations like the National Association of REALTORS release annual trend reports – a trove of data that quantifies everything from consumer age to income levels, and buying habits. While this information is invaluable for its rich statistical content, it can still be a two-dimensional snapshot of the real estate market.
On January 13, Austin Board of REALTORS (ABoR) and the Home Builders Association (HBA) of Greater Austin hosted the 2016 Housing Forecast. The event featured industry analysts sharing insights on trends from this past year. Speaker Malee Tobias, vice president of research at Newland Real Estate Group with 15 years experience in consumer research, presented the report, “Designing for Today’s Consumer.” We asked Tobias to talk more about the buyer persona, which is an extraordinarily detailed description of today’s real estate customer.
Home buying trends
One reason why Tobias’ research is especially fascinating is because Millennials – those kids under the age of 35 – are now fully part of the real estate market. These young people, born between 1980 and 1995, are shaking up the industry in a way we haven’t seen since innovations like planned communities and HOAs. Suddenly, there is a different type of shopper out there. “What was creating value for today’s buyers forced us to do our homework and dig in to what mattered with customers,” says Tobias. “We are seeing some huge demographic shifts happening right now.”
Some commonalities revealed in the report are that with access to more information online, consumers of all ages are smarter and more financially conservative. When you look closer at the different generations, however, that’s where many similarities end.
Actual home buyers
To find out how well Austin buyers are represented by the Newland report, Realty Line interviewed a random sampling of Austin homeowners, including Millennials, Gen X-ers, and Boomers. Some buyer behaviors they shared were startlingly on point.
In her presentation, Tobias explained that today’s real estate customers have a whole new set of skills. In once sense, she’s referring to how the Great Recession has made careful, calculated, penny pinchers of us all. But that only tells part of the story. A lot of what she talked about was a nod to the chasm between Millennials, Gen X-ers, and Boomers. Every new generation eventually hits adulthood and starts “adulting,” or getting married, starting a family, and buying a home. Up until now, there was a pretty predictable path between moving out of mom and dad’s house and into a couple’s first marital home. Tracking Millennials’ path, though, is more like a graphing an earthquake’s seismic activity.
“These young people are going into adulthood much later than previous generations and they’re doing it their own way,” says Tobias. “They’re much more non-linear, and have a more flexible life path. Millennials are making a huge impact on buyer demographics.”
Millennials grew up on the Internet and as a result, they’re walking into agents’ offices armed with more information than their predecessors ever had access to. “That was a game changer,” says John Horton, past president for ABoR. When the first Millennials started trickling into the marketplace, agents and brokers feared that sites like Zillow and Redfin could make them unnecessary and redundant. “They already knew about the property. They already knew what properties they wanted to see. At first, it was disconcerting because it felt like we were losing control. With a buyer that much more knowledgeable – they wouldn’t need us.” But in actuality, says Horton, it turned out to be a boon for the industry. New buyers were getting neutral, third party information online, then relying on their agents as trusted advisors. So what does Horton think about his Millennial clients now? “It’s a very good thing.”
Boomers, in their 50s to 70s today, now have two or three home purchases under their belt. They generally jumped into the market buying a comfortable family home, then upgraded to something more spacious for a growing family, then, as empty nesters, patiently selected a more manageable home they could enjoy in their retirement years.
One young Boomer we spoke with, Jerry Elmas, is a 54-year-old salesman who moved to Austin with his wife from Los Angeles in the mid 1990s. While they didn’t come here for the lower cost of living, it was something they quickly celebrated. The Elmas’ purchased their starter home in Gracywoods. After the arrival of their daughter and then an uptick in local crime, they moved to a roomier house just a mile and a half north. When that neighborhood started showing signs of distress, the Elmas’ packed up and moved to Hill Country, near 2222 and 620. It was a perfect third house for a Boomer couple: a safe, spacious home in a good school district with plenty of kids for their daughter to play with. The Elmas’ home buying experience couldn’t be more opposite from a Millennial couple we spoke with.
Jensen Yancy, 27, and Brandon Willett, 33, owners of Createscape coworking in East Austin, just purchased their first home together as an unmarried couple. About 10 years ago, Willett bought a condo after he graduated from college, but this is Yancy’s first foray into home ownership. Unlike the Elmas’, Yancy and Willett specifically looked for homes in areas of the city that the Elmas’ moved away from not once, but twice. And because the couple intentionally bought a fixer-upper, they didn’t have a list of demands for their agent, other than proximity to the city. The young couple, who do not plan to have kids, wanted a small house (“It’s just easier to maintain,” said Yancy), and very low on their list of concerns were the school district, living in a neighborhood with low crime, and surface features like surrounding manicured yards. The pair sought out a bungalow in St. John’s, a neighborhood on the edge today, but one the boys foresee turning a corner and flourishing in the future.
Newland’s consumer report found that compared to older generations, Millennials are more financially comfortable and less anxious about keeping up with cost of living. Yancy and Willett couldn’t be a better representation of another Newland declaration. A couple in or nearing their 30s, juggle multiple careers and no family-planning agenda, “these young people tend to choose alternative life paths and life stage trajectories.”
Not that much older than the Millennial pair, Randy, a Gen X-er and prosecutor for the city of Austin, purchased his first home in 2012. While Randy’s path between living with his parents to home ownership was not linear, like the typical Boomer, it wasn’t because he was following a Millennial’s alternative life path, either. The Newland report explains that before buying their first home, many Gen X-ers, like Randy, first get an education and then get established in their career. When Randy was ready to buy a house, the bachelor wasn’t very concerned about whether he’d fill his three-bedroom, two-bath ranch with a wife and kids one day, but he did want a spacious home for that possibility. Similar to the more predictable Boomer generation, Randy was concerned with neighborhood safety and property values, but unlike maverick Millennials, he had no aspirations to be a gentrifying trailblazer. Interestingly, Randy’s house is in Gracywoods, the same zip code the Elmas’ left twice and a 2015 “Hottest Neighborhood,” according to the November issue of Realty Line.
We all have the same needs
Tobias says that while the generations tend to follow much different paths, in the end, we all have the same needs. You can see this in our recent past, and how homeowners’ perceptions have evolved over the decades.
In the 1950s, Americans viewed their home as their castle. Then the country hit a few bumps. The early 2000s, recovering from 9/11 and one of the scariest moments in American history, people were craving connection and saw their home as a “hive.” After the recession, homes were viewed like an anchor and taking care of responsibilities were core values. “In the twenty-teens, we think of our home like a lighthouse. It’s where we can be with our family, connect with our neighbors and friends, and really think about our lives and future,” explains Tobias. “It’s a place to help us find true north.” RL