As growing numbers of millennials reach peak home-buying years, the ranks of first-time buyers are swelling — and their needs and preferences around home differ from repeat buyers in a number of notable ways.
According to the Zillow Group Consumer Housing Trends Report 2020, first-time buyers — who trend younger* — are more likely than buyers who have previously bought a home to place greater importance on things outside the home.
For instance, first-timers are more likely than repeat buyers to place significance on shared community amenities such as clubhouses and fitness centers, a home’s potential for rental income and proximity to public transportation.
Repeat buyers are more likely than new buyers to focus on the nitty gritty details of a home, prioritizing such things as en suite bathrooms, preferred floor plans, air conditioning and storage.
The report, based on a survey conducted in the early months of the pandemic, defines a home buyer as a household that purchased a home in the past 12 months of the survey.
It’s worth noting that both groups tend to track closely when it comes to the things they consider important. The differences are a matter of degree and likely reflect their stage in life and the resources they have to make their home preferences a reality.
First-time buyers especially keen on rental income potential
A home’s potential to generate rental income marks one of the biggest differences in home characteristics deemed to be very or extremely important by each group; 39% of first-timers say the opportunity to rent out the entire home in the future is very or extremely important, and 38% place the same importance on the ability to rent out a portion of their home while living there. That compares to 28% of repeat buyers who say future rental income potential is very or extremely important to them, and 25% who say they want the opportunity to share their home with a renter.
The findings mirror generational preferences, indicating that rental income could represent a way around the persistent difficulties younger buyers experience around saving for and financing a home.
The largest gap between first-time and experienced buyers is around the importance of commuting, perhaps because new buyers are more likely to be commuters. Travel to their jobs or school is a very or extremely important concern to 62% of first-time buyers, versus 45% of repeat buyers.
First-timers also are 15 percentage points more likely to place greater importance on being close to public transit (44% versus 29% for repeat buyers) and to living in a racially diverse neighborhood (45% compared to 30%).
Repeat buyers more likely to focus on home features
The report shows that a majority of all buyers place importance on most home features, but repeat buyers are more likely than first-timers to place importance on specific home details.
An en suite bathroom — one located off the main bedroom — is very or extremely important to 66% of repeat buyers, compared to 60% of newbies.
Air conditioning — a perennial must-have on the list of desired home characteristics — is more likely to be important to repeat buyers; 82% rate it very or extremely important compared to 76% of first-timers.
Repeat buyers, who tend to be older, may have accumulated more belongings, making ample storage very or extremely important to 71% of them, compared to 65% of first-timers.
Two other items that distinguish the repeaters: off-street parking or a garage (70% said it was highly important compared to 65% of first-time buyers) and preferred floor plans (75% versus 67%).
One area where both groups are perfectly matched: the importance of a private outdoor space. And no wonder. After a year of staring at the same walls, 72% of each group say it’s very important that they have a place outside — whether it be a patio, deck or backyard — to enjoy.
Takeaways
Ask the right questions. Frame questions for your clients that get at the things that are most important to them, recognizing that what’s important to someone at one point in their life may take on greater or lesser importance as the years pass. Dial into where they are and what they might need at this stage in their life.
Develop deep knowledge of neighborhoods/communities. Since first-timers tend to place greater importance on things outside the confines of their home, become familiar with nearby transit, and other things your buyers might ask about. Imagine the buyer living out their life in that spot, and what they might want to know.
Develop a checklist to quickly surface deal-breakers and must-haves. Use Zillow’s list of home characteristics or come up with your own to quickly find out deal-breakers or priorities that can help seal the deal.
Generational ages are as follows: Gen Z, ages 18-25 Millennial, ages 26-40 Gen X, ages 41-55 Baby boomers, ages 56-75 Silent generation, age 76+
For more information on ZILLOW and Showing Time, contact Laura Gillespie below.
LAURA GILLESPIE Director, Broker Relations M 519.841.8000 #zillowcanada
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