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The Millennial Effect: As a real estate attorney, are you paying close attention?
Millennials ... they’re a growing force in real estate.
According to a consumer-housing-trends report from Zillow, half of today’s homeowners are under the age of 36. This means that millennial investments are starting to drive the real estate market. Or to put it another way:
This is an expected outcome of the “millennial effect” ... i.e., how millennials are shaping our world. From marriage to movies to money, millennials are influencing everything—real estate too! To keep up, smart real estate attorneys are staying on top of the millennial effect.
Real estate attorneys who aren’t on top of the millennial effect ...
...they’re falling behind the competition.
Millennials have a specific mindset when it comes to real estate. They apply the same rigor to house shopping as they do to clothes shopping. This rigor is a perfectionist’s rigor; specifically, millennials want the perfect home (and when I say “the perfect home,” I mean “perfect!”).
Why real estate perfectionism?
In part, it’s because millennials don’t have the time to be bothered with fixer-uppers. More often than not, they choose low-maintenance, low-worry, new construction. According to the Inc. article How Millennials Are Changing the Housing Market:
Almost half of Millennials would rather buy a brand new house in order to avoid any maintenance issues that might occur early on.
As millennials flood the real estate market, searching for brand new homes—seeking to protect themselves in the “perfect” deal –real estate attorneys are going to be in high demand. Millennials will demand well-informed, well-tooled attorneys who can help with brokerage agreements, purchase agreements, negotiations and tax consequences.
In this expanding market of millennial buyers and sellers, real estate attorneys have an opportunity to expand their customer base. But to do so, attorneys also need to understand how millennials think—that is, how they choose their real estate investments.
Most millennials choose to buy homes in the suburbs. About 57% of buyers 36 and under closed on homes in the suburbs in 2017, compared with just 15% of those who became homeowners in cities, this according to research from the National Association of Realtors.
But more and more, millennials are buying in the city. City living for millennials is driven by work proximity and new life experiences. However, this may be creating a bit of a showdown with baby boomers who are looking to downsize out of their suburban homes. As reported in Boomers, Millennials, and the McMansions No One Wants from Realtor.com:
Younger and older generations alike are gravitating toward smaller dwellings in more urban, walkable suburbs and cities, with restaurants and coffee shops around the corner. It's leading to a real estate traffic jam: Increasingly, boomers are getting stuck, because most can't buy the home of their dreams until they unload their current ones. And many millennials have neither the desire nor the means to help them out.
With more and more millennials gravitating towards city life, legal issues will arise ... issues that can only be answered by real estate attorneys. Because renting is much greater in cities compared to the suburbs, millennials will turn to attorneys to help with rental issues. And because city buying is a better long-term investment than suburb buying, real estate attorneys will be critical to answering the investment questions of millennials.
But investment questions don’t end there because millennials are making expensive investments and making them sooner. As homebuyers, many millennials aren’t investing in starter homes. Instead, they’re leaping forward and investing in high-end real estate.
In addition to eschewing fixer-uppers, millennials often skip starter homes. Instead, they seek higher-end real estate
when they can. In these instances, they’ve saved for a down payment by waiting longer to buy and/or by living with family and friends. In the recent article Millennials Skipping Starter Homes and Going Straight for Luxury Homes, neighborhoods.com reported that:
Luxury home builder Toll Brothers Inc. stated that 23 percent of its sales this year were to customers with at least one buyer age 35 or younger. The average contract price for a Toll Brothers home is $837,000, well into the category of what would be considered a high-end or luxury home.
These high-end purchases reflect the millennial’s growing interest in real estate investing. As Forbes reported:
85 percent of millennials think real estate is a good investment. With such a strong preference for real estate, it is important to understand why millennials are interested and how they may invest in the future.
Why is it important? Well, last year, millennials became the largest generation of Americans.
If you’re a real estate attorney, serving these investment needs is important. As millennials continue to invest in real estate, they’ll prove themselves a key component of your legal practice in the upcoming years.
Legal issues impact home buying, city living and high-end investments, and because of this, a growing number of millennials will be turning to real estate attorneys. As a real estate attorney, you’ll have to watch out for red flags in a multitude of real estate documents ... sales agreements, loan applications, homeowner’s association agreements and more.
To help millennial buyers/investors, you’ll need to stay on top of:
So that you can stay on top of things and race past your competition, LexisNexis real estate essentials provide the expert guidance, checklists and forms to save you time and help you better serve your millennial clients.
Lexis Advance’s Real Estate Practice Center and Lexis Practice Advisor–Real Estate deliver comprehensive collections of buying, selling and financing resources, including:
For your next generation of clients, find the next generation of real estate resources you’ll need, with ease, all in one place.