Millennials are the future of the real estate industry and for several years now, the industry has been quivering as millennials seem uninterested to "give up renting or move out of their parents' basement" to invest in a property. However, a new report has now surfaced showing that millennials are finally putting their money into real estate because of the availability of affordable housing.
CNN Money recently reported that "millennials represented a large share of new mortgages" in areas such as Des Moines, Iowa; Provo, Utah; Baton Rouge, Louisiana; Pittsburgh, Pennsylvania; Lafayette, Louisiana; Grand Rapids, Michigan; Madison, Wisconsin; Clarksville, Tennesee; New Orleans, Louisiana; and Shreveport, Louisiana.
This phenomenon was described by Prashant Gopal on Bloomberg Business as "the return of the affordable starter home." To cater to millennials, builders like D.R. Horton, TriPointe, Taylor Morrison and Meritage Homes are now concentrating on developments for first-time buyers.
While other builders are chasing fat profits by addressing the needs of luxury buyers, D.R. Horton was focusing in on the "undeserved market." They created their new and affordable Express brand that built affordable communities throughout the country. Now, more developers are expected to follow suit.
"When D.R. Horton first announced it was going to go after the entry level portion of the market, a lot of other builders wanted to wait and see how it turned out," said Brad Hunter, Chief Economist for real estate research firm Metrostudy. "Now that they've seen the concept proven, they're figuring out their own way to provide a home that's more affordable."
To make homes affordable to millennials, other builders are streamlining their offers. By stripping their homes of some frills and designs, they can offer lower prices.
"Meritage has been expanding a segment it calls 'entry-level-plus' which starst in the low $200,000s in the Houston area," Bloomberg reported. "The entry-level-plus homes are $50,000 to $100,000 cheaper than the company's typical homes in the Houston market because they're smaller and also because they're designed without features like fireplaces and mudrooms, and without all the architectural detail that might be found on more expensive homes."
