Contrary to what we Boomers think, Millennials are no longer children. Born between 1981 and 1996, they are in their twenties, or even late thirties, and already entering the single family home market.
Millennials will outnumber Baby Boomers in 2020 and they’re a market segment the modular home industry can no longer ignore.
The modular home industry, stagnant for decades, is once again seeing an evolution in what the customer wants (Millennials) and is working hard to meet their needs. It’s not easy to evolve into something new, but it must happen. Notice I didn’t say “innovation” or “disruption.” Both of those terms are integral parts of the housing evolution, but neither on their own bring lasting change.
Even though 90% of Millennials want to buy a single family home, fewer than 5% say they can do it this year, even though the vast majority see owning a home as being more affordable than renting.
Of those who want to purchase a home, 72% said they couldn’t afford it, with 62% saying they specifically lacked a down payment, typically calculated at 20% of a home’s purchase price.
It’s no secret that, compared to previous generations, Millennials are late to the home buying game. Boomers can’t understand why their children aren’t buying new homes like they did when they were in their thirties. The answer is simply that buying a home in the 1970s was a lot easier than it is today.
When Boomers were in their thirties, they bought homes entirely differently than today. They found their realtors through personal referrals, the Yellow Pages, or by simply walking into an open house.
But Millennials are both captive to and captivated by technology, which has found its way into the home buying process. Of older Millennials, 81% have found their home through a mobile app. Given this, the modular housing industry, including everyone from the factory to the builder, needs to learn that leveraging technology will be necessary to capture the generation hooked on apps.
Younger millennials check their phones, on average, 150 times a day, and their nearly 24-hour use of social media has changed our culture by introducing us to emojis, converting data to visuals rather than text, and shortening our attention span to 140 characters.
Millennials are seeking slightly smaller homes, and want properties that suit their lifestyle, such as nice yards for pets or organic gardens. Location preferences have changed and many Millennials want to live in a walkable city or near public transportation.
While past generations may have looked at their homes as status symbols, Millennial home buyers want something different. Millennials are environmentally conscious, and are seeking energy conservation, open spaces, walking trails, and sustainability in their home choices.
When building a new single family home, Millennials will focus on energy efficiency, including programs like Net Zero. Use of green building materials and technology will also hold you in good standing in the Millennial market. Whether it’s energy-efficient appliances or smart thermostats, they will see these features as requirements, not value-adds.
Millennials are not interested in fixer-uppers the way past generations have been, and do not budget for significant repair and maintenance costs. This is one hook the modular home industry can use to attract these new home buyers our way.
Nearly 60% of Millennials are buying houses in the suburbs, with another 16% choosing to live in small towns. This is our industry’s playground. Modular factories and modular new home builders, especially those East of the Mississippi, know these areas intimately and there is no reason we can’t get more than our fair share of new home builds from Millennials.
If you are a site builder and want to be part of the modular housing evolution, you need to begin now looking at the opportunities that await you.
If our industry doesn’t meet the evolutionary needs of Millennials, we will never be able to evolve to meet the housing needs of Gen Z, those born between 1997 and 2012.
Millennials are an optimistic generation, Gen Z is seen as more pragmatic. When Gen Z’ers reach their late thirties, our industry will see another evolution in home building.
Evolution in housing is inevitable and if you, the modular home factory owner, or you, the single family modular new home builder, aren’t ready to change and grow in new directions, it’s probably time to list your business for sale and hope you sell it before you are forced out simply because you didn’t evolve.
Gary Fleisher is a housing veteran, editor/writer of Modular Home Builder blog, and an industry speaker/consultant. Contact modcoach@gmail.com