Price vs. Value: What Millennial Home Buyers Really Want

Millennials have been brought up in a world in which they are constantly encouraged to sort by price. Millennials have proven they will put in the time to find the cheapest deals, from spending hours scouring eCommerce platforms to using price comparisons to purchase flights at odd times with layovers at little-known airports. However, when it comes to buying or renting a house, the cheapest option doesn’t always translate to the best value.

Millennials measure value and make decisions using different criteria than previous generations, and that is heavily reflected in their home-buying habits. The traditional method of searching for properties based on price, construction and location doesn’t appear to resonate as much with the millennial demographic. For that reason, realtors must adapt to the young generation’s shifting desires and motivations. Three key factors should be considered when focusing in on what millennials value even more than price.

Quality of Life

Millennials have repeatedly demonstrated that quality of life is a high priority for them — so much so that they would be willing to take a $7,600 pay cut for a better quality work life. However, the same idea rings true for other aspects of millennial life, and that should be reflected in the approach realtors take when showing them properties.

The bottom line is that where one lives greatly impacts the quality of one's life. As this is a main tenet of the millennial lifestyle, more focus should be placed on budget, transportation, lifestyle and education than on price alone. Realtors should explain to millennials that while they might pay $2,000 a month on one mortgage versus $1,800 on another, it is the proximity to schools, supermarkets, transport and community that really adds value.

A good strategy is to always begin by asking millennials where they work to try and find neighborhoods where the commute is short — or even better, where they can take public transport to work. Follow by asking them about their interests, hobbies, families and ambitions as well in order to fully understand the potential solutions that maximize their quality of life and allow them to enjoy what matters to them most.

Offered Experiences

In search of this higher quality of life, millennials have prioritized experiences over stuff. With less access to expendable funds than previous generations, millennials tend to invest mostly in travel and cultural experiences. The same mentality has carried over into the realm of home buying, with many millennials giving up on the prospect of home ownership altogether.

Despite this mentality shift, realtors can recapture the attention of millennials by showing properties that match buyers’ lifestyles in locations that offer the same type of experiences they often seek through travel. For example, hip bars and cafes, entertainment, fitness centers and central hubs that offer lots to do within a stone’s throw should take precedence when appealing to potential millennial home buyers.

Instagram and other social media have demonstrated perhaps better than anything the importance of interesting experiences to millennials. In fact, a recent survey revealed that two-fifths of millennials actually choose a travel spot based on its “Instagrammability.” Realtors can potentially leverage this fact not only by suggesting homes in hip locations but also by using links to Instagram pages that show millennials the unique parts of different neighborhoods right off the bat.

Investment Opportunities

The value of presenting properties in hip areas extends beyond just the idea of experiences: These areas also generally provide strong investment opportunities and higher resale values as property prices rise due to gentrification. Location is, after all, one of the biggest factors in determining a home’s resale value. For millennials, earning a return on investment is a key consideration when purchasing a home, particularly due to the fact that they may not necessarily see it as a permanent purchase.

According to a recent report by Bank of America, nearly 70 percent of millennials who had already purchased a home viewed it as a starter house — a stepping stone to their future dream property. Therefore, realtors must consider that millennials might eventually resell their homes and upgrade to something bigger and better. As such, presenting them with options that work as an investment opportunity will enable them to more easily achieve their future goals.

To find the areas with the most promising investment opportunities, look for places where new businesses are opening. Real estate around businesses like Starbucks, for example, tends to push up prices. Not only do these types of businesses normally fall within areas that attract millennials, they also demonstrate high potential for profitability, as people recognize the extensive research these businesses have performed before selecting a location.

While millennials and older generations might align in wanting to earn a return on their property purchases, there are fundamental differences between their respective mentalities. For this reason, realtors must accommodate the preferences of the younger generation by focusing in on what specifically brings value to them.

Peter Esho is the founder and CEO of CRIBZ, an artificial intelligence real estate utility built specifically for millennials.