Millennials are impacting the construction industry in more ways than just the oft-discussed labor shortage.
In Part 1 of this two-part article, our Tallahassee construction law attorneys discussed how the Great Recession affected millennials’ attitude toward homeownership and also examined millennials’ migratory patterns. Today, we will cover millennials’ spending priorities, their financial burdens, and how our industry can meet their needs.
Millennials’ Spending Priorities
Millennials are known to value experiences over material items, and one of their most commonly sought experiences is city living. City rent prices mean that saving for a downpayment on a future home is harder than it would be in an area where rent prices are lower. Home prices are also typically higher in big cities, although many millennials plan to ultimately settle down somewhere more affordable.
Millennials tend to choose renting and having a travel budget over renting and saving for a down payment. Many millennials are also marrying and having children later in life than previous generations.
Financial Burdens on Millennials
The fact that millennials aren’t buying homes as early doesn’t just have to do with their spending preferences; it also has to do with their spending capabilities.
Individuals born between 1980 and 2000 are considered millennials. Since this is a large age range, millennials are split into two categories:
Xennials–Millennials who are currently in their 30s
Millennials–Millennials who are currently in their 20s or late teens
One of the major differences between millennials and xennials is their attitude toward debt. Xennials were born during a time when accruing debt was encouraged, whereas millennials witnessed the financial hardships associated with doing so. Many Xennials are still paying off large student loans, while millennials are debt-averse and consequently warier of homeownership.
Millennials and xennials also make less money than previous generations, and house prices are rising. Needless to say, these two factors make home ownership less attainable for young people.
Building For Millennials
Millennials haven’t written off homeownership; in fact, most still want to buy when the time and place is right. They just need homes that fit their budget and lifestyle.
There is a limited amount of starter homes on the market right now, which means there is ample opportunity for construction companies to cash in on this demographic. The issue is that new but affordable homes result in a reduced profit margin for the home builder. This means that for builders to benefit, we need to sell more starter homes by encouraging homeownership among millennials. To do so, construction companies should keep the generation’s needs in mind. These include affordability and a closer proximity to their places of employment.
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.