Millenials: reshaping luxury real estate
Defined as the generation born between 1981–1996, the oldest Millennials are approaching 40, while the youngest have now reached their mid-twenties. In short, it’s safe to
say that Millennials are not kids anymore. They have families, degrees and high-paying jobs. They also make up the largest percentage of luxury real estate buyers — 37% as of 2019. As Millennials are the new majority in real estate, they’re having significant influence over amenities, design trends and the overall marketplace. Some major interests include minimalism, smart technology and organic materials, as well as wellness and entertainment-related amenities. The following are some of the most noteworthy trends that continue to shape the industry.
Urbanization (…or Back to the Suburbs?)
As recent as our March 2020 report, The Great Wellness Surge: Bringing the Best Life Home, the Millennial preference for location consisted of urban environments with numerous community amenities for a hassle-free lifestyle. A whopping 47% even pictured themselves not owning a car one day.
As the events of coronavirus (COVID-19) unfolded, this completely altered the real estate landscape, with activity predictably lagging; however, it has since picked back up, especially in suburban and rural areas. Across the board, as we’ve heard from many of our member real estate companies, suburbs saw substantial surges during spring, including a 10% increase in sales in the Boston area, 15% in Sacramento and 37% in Connecticut.
Beyond being a departure from densely populated areas, suburbs and rural areas have offered an additional advantage: house and lot size. Buyers are now looking for homes that are 20%–30% larger in size — a huge contrast to the home sizes they were seeking earlier this year. Today’s buyer wants enough room for private offices, pools, tennis courts, large backyards and other lifestyle amenities, many of which are now more difficult to access outside the home.
On the other hand, some small cities still see very active real estate markets, including Austin, Texas; Estes Park, Colorado; Reno, Nevada; and numerous cities in Florida.3 They offer the advantage of being urban settings, but less populated than larger cities — meaning more space and less opportunity for exposure.
It will be interesting to see how this trend shakes out long-term. Millennials are known for enjoying walkable locations close to dining, shopping and other community offerings. As businesses are able to safely open back up, we may see a resurgence in the demand for walkability and nearby services, which has the potential to transform suburban communities.
Minimalism Makes Its Mark
Some driving forces behind Millennial home design preferences include a desire to simplify their busy lifestyles — as well as to alleviate an abundant, almost overwhelming
access to information due to the fact that their childhoods and adolescent years were heavily influenced by the rise of the internet.
“Millennials always see what’s trending, even if they don’t want to, making it easier for them to keep up with home design trends,” says Traci Connell, the Principal Lead Designer of the award-winning Traci Connell Interiors in Dallas, Texas.
She further describes this generation as being one that aspires to make their spaces “both functional and aesthetically pleasing,” preferably implementing minimalist design styles since their busy lives demand efficiency — and “clutter is against everything they stand for.”
Minimalism will be doubly desirable in a post-COVID-19 world as cleanliness continues to be prioritized. This design style ensures that “there is less to clean and less upkeep“ in addition to bringing a “fresh ambiance” to space.
Another trend important to Millennials is the desire to reconnect to nature. Connell states, “Low-maintenance plants will continue to be all the rage during the next few years, and we will see new ways to incorporate organic materials into flooring, walls and other design features.”
As previously mentioned, Millennials are looking for a home that is as functional as it is aesthetically pleasing. To that end, they’re looking for amenities that fit their desired lifestyles, which include cooking, entertaining, working from home, wellness and the ease of smart living. “Millennials enjoy cooking, especially experimenting with different techniques and cuisines, so we see the kitchen design being extremely important to the design of the home,” says Connell. “Many Millennials would say the kitchen is the most important room in the home. However, what this generation values the most is efficiency. Functional storage and energy-saving appliances are essential kitchen amenities for them.” The push for next-level kitchens is not a new phenomenon among Millennials. In our 2018 report, The Rise of the New Aristocracy, Millennials prioritized entertainment-related amenities, with commercial-grade appliances and outdoor spaces having been among the top picks. Working from home has also been trending since that same time period, although it has received no greater attention than it has today. As previously stated, much of the interest in increased square footage has been the result of an increase in demand for home offices and wellness-oriented amenities — both of which were, up until now, enjoyed by most outside of the home. In our 2018 study, pools, spas, gyms and dedicated fitness rooms were labeled as “essential” or “nice to have.” We’re seeing similar patterns today, with searches for tennis courts, pools and other sports-related amenities being up across the LPI network. Returning to an interest in smart homes, Millennials are opting for properties with whole-house control systems, which involve everything from HVAC and lighting to music and entertainment systems. They also utilize technology to ensure safety and security, with roughly half considering surveillance cameras, security systems and auto-control surveillance to be not only preferred but essential.
Similar to the way technology has streamlined the lives of Millennials, they are opting for the same simplified principles in their living spaces, incorporating minimalism into everything from design to smart home features. COVID-19 is also shaping Millennial preferences, requiring more amenities of the home and possibly stalling the trend of urbanization. Time will tell how this demographic — and circumstances outside of their control — will reshape the industry.
Source: Luxury Portfolio International