Michael Alexander Smith – Real Estate Broker at Berkshire Hathaway HomeServices
Ask any real estate professional about the current state of the market and they’ll tell you it’s unlike anything they’ve ever seen before. The frenzy to snap up property—both primary residences and second homes—remains high two years into a global pandemic that’s redefined what people want and need from their space.
Further fueling the market’s unique dynamic are contrasting generational approaches to home ownership. Millennials are more likely to make quick decisions when buying, which can be advantageous in this frenetic environment. Meanwhile, Gen-Xers and Baby Boomers want to evaluate the whole financial health of their investment before taking the plunge.
With interest rates in flux and bidding wars becoming the norm, what’s the right strategy for each generation to “win” in this market? We sat down with Berkshire Hathaway HomeServices experts from across North America for a cross-generational real estate master class.
Q: What interesting real estate tactics do you see Millennials implement more frequently than older generations?
Stephen C. Roney, CEO, Berkshire Hathaway HomeServices Utah Properties: In areas like Park City, we’ve seen an influx of people—Millennials in particular—wanting to take advantage of the outdoor, active lifestyle. That can be expensive, though, so we’ve seen many Millennials who are making a good salary but not considered part of a “wealthy class” partner with someone else in order to use two incomes to qualify for buying a home. So, there are a lot of unmarried people who buy together. They may or may not be romantic couples, oftentimes they may just be friends. I’d say that’s a departure from how older generations traditionally bought primary residences.
Millennials are obviously more tech savvy than older generations, and they use online platforms to do everything from researching properties to obtaining financing. When it comes to second homes, however, Millennials are more focused than other generations on generating rent from the property. That can be more complicated than they anticipated here in Utah, since many resort areas have different rules around nightly, weekly and long-term rentals. So Millennials would be well-advised to take a cue from older generations and partner with a skilled real estate professional, alongside their own online research, to navigate the finer nuances of the local property markets.
Q: What advice do you give Millennial clients struggling to find a home—or even gain entry into this hot market?
Candace Adams, President & CEO, Berkshire Hathaway HomeServices New England Properties/Westchester Properties/New York Properties/Hudson Valley Properties:Increasing prices are a massive challenge for Millennials, and home appreciation right now is going to knock out some entry-level buyers. With that being said, we advise clients to look closely at renting versus buying. Many Millennials are paying a lot more in rent than they would if they bought a home right now. We believe that owning property provides financial security for people and, historically, it’s been a wonderful investment for past generations. So we try educating our Millennial clients about their options, sharing lending and financing choices that are right for them. For this generation, there are renovation loans available and some great first-time buyer opportunities and mortgage lending.
One thing Millennial buyers have going for them, at least in the New York City area, is that they’re much more open in their geographic search. They’re coming to look at one particular town but are fine with us introducing them to inventory in an expanded area, because they haven’t really selected a community yet. Older buyers can sometimes be really entrenched in a community they’ve already lived in and therefore are less flexible with their search.
Q: What are some challenges your older generation buyers are encountering in this market?
Ann King, President, Berkshire Hathaway HomeServices Florida Network Realty: Moving is overwhelming for many of my Gen-X and Baby Boomer clients. They get decision fatigue and it’s hard for them to let go of the material stuff they’ve collected over the years. Older Baby Boomers get frustrated by how quickly the market is moving right now and don’t utilize technology like younger buyers.
For those clients, I tell them to look at their situation in a “Millennial way.” The younger generations want to be able to pack up and go—to have more experiences than things. So I try to get my Baby Boomers into a little bit of that mindset, so they’re able to find a home that’s livable for them but also allows them to travel and to do other things that will be meaningful to them during this life stage.
Q: What do you think these generations can learn from one another in terms of buying real estate?
Ian Gengos, CEO, Berkshire Hathaway HomeServices Baja Real Estate: Millennials can learn from older generations about long-term strategy and risk management. Millennials make fast decisions. Gen-X and Baby Boomers are looking for more upside, value and return on their investment. The older generation has been brought up with a more cautious, risk-averse mentality. So I think Millennials will certainly benefit from looking at things longer term.
On the flip side, Boomers themselves can take a page from the Millennials’ playbook and trust their instincts a little bit more. Play out some of the options they have in front of them in real time, act a bit more quickly and collaborate more with people they trust as their advisors.