Millennials comprised 43% of home buyers in 2021–the largest in the United States. [1] As more millennials enter the housing market and as home prices skyrocket, there are a few key trends you should keep in mind as a contractor or home improvement business. Understanding millennial homebuyers will determine your home improvement business’ long-term success as customer demographics change in a $1.4 billion industry. [2]
They’re buying fixer-uppers
Although most millennials are first-time home buyers, they are embracing fixer-uppers at a high rate. 82% of millennials said they would buy a fixer-upper home. [3] This age demographic is drawn to unconventional styles and the charm of older homes. However, older homes need modern upgrades and millennials are ready to splash the cash. Learning how to reach and activate this age demographic is critical to your business’ success.
Spending on home improvement by millennials
Millennials are finding more affordable, older homes in the suburbs or exurbs of large cities. Angi’s 2021 survey of millennial homeowners found that nearly 70% budgeted over $25,000 for home improvement projects. 46% say they’re already over budget on their home improvement projects within their first year of homeownership. [4]
ROI is a big motivator
Coupled with their willingness to update their homes, millennials are obsessed with return on investment (ROI) and getting the most bang for their buck. In 2019, millennials listed ROI as their primary reason for renovating. This means that as a business you’re competing locally and on the internet.
- 77% of millennials researched typical project costs on the internet.
- 64% checked larger retailers for pricing
- 30% asked a previously used contractor [5]
This drive to increase ROI means that millennial homeowners are more open to monthly payments and financing options than you may believe. Hearth makes it easy to find monthly payment options for projects of any size by simplifying the financing process through leading edge technology, no hard credit inquiries, and easy-to-understand monthly payment options.
Start winning with financing
Forever students
According to a recent Harris Poll survey, many millennials feel pressure to be competent in home maintenance and improvement. 42% felt embarrassed about their low home maintenance skills. 60% felt the pressure to project overconfidence in their abilities to friends. Get this. Almost one-third of millennials didn’t feel confident changing a lightbulb. [6] The jokes write themselves.
Despite this shocking news, lack of education presents an opportunity for home improvement professionals to position themselves as a resource and educator. Although nearly one-third of millennials said they would feel embarrassed hiring a contractor for a project, this hesitancy most likely comes from unfamiliarity with the project scope or the expertise a contractor can share. [6] When interacting with millennials on the job site, make sure you walk them through your process and why it’s important they call you for the job.
Marketing to millennials
There is so much social media and marketing advice that can make your head spin. Video is king when reaching millennials on social media. A 2021 HubSpot report claims that 50% of millennials couldn’t live without video in their daily lives. [7] Focusing on making the most genuine and informative video content should be part of your marketing strategy. Whether it’s teaching someone how to change a lightbulb or rehang a door, anything that gets eyes on you and what you can do will do wonders for your business.
Interestingly, UpSwell, a marketing firm specializing in small business, direct mail was the most effective way to advertise to millennials. Word of mouth came in dead last. [8] Although search engines and social media marketing are critical channels for you to use, direct outreach still works.
Space to live and work
Americans are spending more time in our homes due to changes in work-from-home expectations and the ripple effects of 2020. [9] However, these changes have motivated millennials to make drastic changes to their homes that make them more livable with an eye on resale value. [2]
According to survey data, there are three types of renovations or home improvement projects at the top of millennials’ lists:
- 64% Home offices
- 49% Home gyms
- 43% Pools and hot tubs [10]
How financing helps millennial homeowners
There is a massive opportunity for experienced contractors to reach millennials, educate them, and deliver projects that generate ROI. A Bank of America report found that 42% of millennials are using loans to finance their renovation projects that total $10,000 or more. [3]
Breaking project costs down into monthly payments for millennials using the Hearth app is a quick, tech-savvy way to show them a payment alternative to dipping into their savings. Also, because Hearth shows a maximum dollar amount of what someone can qualify for a loan, they can dream big and increase their project scope just by using the simple financing calculator you can share or embed in your site.
If a homeowner wants to borrow $15,000 for a project, Hearth’s financial tool will show them their actual spending power by showing them their maximum loan amount. Once they know how much they can borrow, they have a license to dream, and you have the opportunity to upsell.
Millennials want a frictionless customer experience
For millennials, the days of carbon copy contracts, paper estimates, and writing checks are gone. This generation wants easy, seamless customer experiences with little friction and no paperwork. Investing in digital quotes, contracts, invoices, and payments and automated reminders can professionalize your customer experience and lead to increased referral business because of the elevated customer experience you can offer. Luckily, Hearth also has you covered there. We have built the digital tools you need to deliver a great customer experience to any customer regardless of their age or generation.
[1] “NAR Report Shows Share of Millennial Home Buyers Continues to Rise,” nar.realtor, National Association of Realtors, March 23, 2022 link
[2] “Value of homeowner improvements and repair expenditure in the United States from Q1 2015 to Q1 2021 with forecast for 2022,” statista.com, Statista, 2021. link
[3] Hoffower, Hillary, “Millennials are flocking to fixer-uppers because it’s the only way some can afford a home,” businessinsider.com, Business Insider, May 13, 2021. link
[4] “New Millennial Homeowners Spend Big on Renovations and Repairs During Pandemic,” angi.com, Angi, 2021. link
[5] Pudloski, Kelsey, “5 ways Millennials are renovating their homes differently,” livabl.com, BuzzBuzzHome, July 11, 2019. link
[6] Groth, Leah, “Almost Half Of Millennial Homeowners Are Embarrassed By Their Lack Of Home Maintenance Skills,” mydomaine.com, MyDomaine, February 22, 2021. link
[7] Bump, Pamela, “How Video Consumption is Changing in 2021 [New Research],” blog.hubspot.com, HubSpot, February 4, 2021. link
[8] “Survey Finds that Younger Consumers Plan to Spend More on Home Improvement Services in 2021,” prnewswire.com, Cision, April 28, 2021. link
[9] “Homeowners Are on a Home Improvement Spending Spree,” magazine.realtor, National Association of Realtors, February 4, 2021. link
[10] Davidson, Candace, “The 3 Things Millennial Homebuyers are Searching For (That Baby Boomers Couldn’t Care Less About),” purewow.com, PureWow, March 10, 2021. Link
