Are Millenials an Untapped Detroit Home Buyer Market?

[DetroitPlanner]

The survey reads that the millennial is the largest group in the nations history which kinda confuses me when we have been told that the boomers were the largest market in history,which one is it?

The average family has 2.5 kids or so. The millennials are the children of the boomers. Add to this that immigration has added to the boomer population. In addition the boomers mostly missed large wars killing them off before they could have kids [[granted some at the fringe may have had Vietnam). It is relatively simple math when you have knowledge of all of the variables

Vitalis, It would stand to reason that developers building in Detroit would not need to worry about putting in as much infrastructure [[streets, water, sewers) as they would in a greenfield. It is already there and is underutilized. It is sized for smaller lots. No way will millennials be able to afford huge homes in large numbers.

What I am asking is a relatively simple question, not trashing Pulte, not trashing the suburbs, but for some good ideas in how to tap this market. I am assuming that those that post on this site have a fair number of millennials. What do they want? Detroit has an opportunity here, we have a lot of resources to offer developers, but we have obvious problems.

Here is USA Today's take on this: http://www.usatoday.com/story/money/...-dead/2029379/

How do we solve this so we can tap into the market?

[Cliffy]

Its really hard to gage what the young crowd wants. I had a friend buy a 3500 sq ft house in northern Macomb. I had a friend buy a house in South Lyon. Then I have friends that purchased homes in Northern Oakland County. I don't buy the theory that everyone wants to live in the city in town homes. Most of my friends that purchased homes, moved into detached homes, not condos. The ones that did buy condos now regret their decision and want to leave.

One thing is that we still want a backyard to sit out and have a beer and bbq. That lifestyle can not be had in an apartment downtown somewhere. Its almost like you're locked up in a cage in some tiny apartment 30 floors high in a concrete jungle. That lifestyle may be cool when you're 25 and just out of school but once you get older and realize that drinking and eating out every night is expensive and bad for your health and you don't want to be 40 years old with no assets and some weak 401k. I don't know. I question the surveys because my friends from SE Michigan aren't dying to move to Chicago. They all make good money and like the suburban lifestyle.

[Richard]

It is not really what they want verses how it works,I am a boomer my children are the millennial,my first house married before children was a small bungalow,my sons first house was a 3000 sqft house no children he had it less then a year before he lost it.

IMHO that is what screwed up the market as it used to be you bought a starter house then you had children and sold the starter house that had some equity used that equity to buy a bigger house etc etc.

They skipped that step, boom it is on to a house that you grow into verses one you grow out of removing that part of the cycle.

So maybe a mixed neighborhood with starter homes and some 2nd tier homes if they are near a historic district recreated bungalows vintage style cheap to maintain low overhead.

Given the currant situation maybe a charter school within walking distance because given the currant situation you could not,no way drop a large multi block build without addressing the other ills.

Maybe a planned community urban style,but you could not use the existing utilities because of their age they would have to be replaced,so tough call,by the time you factor all of that into it would become very expensive to do it urban style.

[hybridy]

many of the millenials i know including myself have indeed purchased homes. we are college educated, currently employed. likely advancing in career having survived recession layoff's cause we were 'cheap' at the time. we carry large student debt loads and have good credit/income, but lack large savings. we finance through fha. we bought at the bottom of the market and have low interest, 30-yr fixed mortgages.

what we are looking for:
>$200K
1000-1500 SF
3 bedrooms
1+ baths
2-car garage
1940-1970's construction [[due to percieved quality/character over new construction)
wood floors, updated mechanicals - we can see beyond cosmetic issues and fully intent to update/remodel to our tastes
established neighborhoods that have mature trees, mix of styles, and highly maintained

[bailey]

many of the millenials i know including myself have indeed purchased homes. we are college educated, currently employed. likely advancing in career having survived recession layoff's cause we were 'cheap' at the time. we carry large student debt loads and have good credit/income, but lack large savings. we finance through fha. we bought at the bottom of the market and have low interest, 30-yr fixed mortgages.

what we are looking for:
>$200K
1000-1500 SF
3 bedrooms
1+ baths
2-car garage
1940-1970's construction [[due to percieved quality/character over new construction)
wood floors, updated mechanicals - we can see beyond cosmetic issues and fully intent to update/remodel to our tastes
established neighborhoods that have mature trees, mix of styles, and highly maintained

I would agree...as it applies to people around here. I would substitute one caveat, my experience has been that we/they are buying as big a house as the budget will allow.

I have a couple of friends that bought WAY more house than they needed simply because it was where they wanted to be and was in budget. Which echo's Richard's point. Gen y/ millennials when they buy are buying the "grow into" place in many cases and not a "starter" home. Heck one couple I know hasn't had furniture in multiple rooms for years now because they "never go in there anyway". Money and houses are cheap around here.

[swingline]

Pulte has recently executed some modestly sized developments in urban contexts in other parts of the country that are aimed at child-rearing Millennials. But nowhere other than Detroit would they, or any developer, face an obstacle to demand for such a product like that presented by DPS. It's no secret that school quality is the single largest location factor for most households with children looking to make a home purchase. Could a creative solution be found through some kind of partnership between Pulte and a charter school developer? Developers have built schools as part of exurban projects. That's apples and oranges though. Could a developer also contribute to a solution in a poor performing district? Smart planners, educators and developers should work together on this and find a solution.

[gameguy56]

That's apples and oranges though. Could a developer also contribute to a solution in a poor performing district? Smart planners, educators and developers should work together on this and find a solution.

Mies did this over 50 years ago. Isn't that basically what they did in Lafayette Park/Chrysler Elementary?

[ghettopalmetto]

Someone should tell Pulte that by focusing on families with school-age children, they're throwing away 75% of their potential market. There are just as many one-person households. Not everyone needs four-bedrooms, three baths, and a "bonus" room [[whatever the hell that is).

I'm just sayin.

[Cliffy]

many of the millenials i know including myself have indeed purchased homes. we are college educated, currently employed. likely advancing in career having survived recession layoff's cause we were 'cheap' at the time. we carry large student debt loads and have good credit/income, but lack large savings. we finance through fha. we bought at the bottom of the market and have low interest, 30-yr fixed mortgages.

what we are looking for:
>$200K
1000-1500 SF
3 bedrooms
1+ baths
2-car garage
1940-1970's construction [[due to percieved quality/character over new construction)
wood floors, updated mechanicals - we can see beyond cosmetic issues and fully intent to update/remodel to our tastes
established neighborhoods that have mature trees, mix of styles, and highly maintained

That is scary. That sums me up but my house is actually from the 20's.

[p69rrh51]

many of the millenials i know including myself have indeed purchased homes. we are college educated, currently employed. likely advancing in career having survived recession layoff's cause we were 'cheap' at the time. we carry large student debt loads and have good credit/income, but lack large savings. we finance through fha. we bought at the bottom of the market and have low interest, 30-yr fixed mortgages.

what we are looking for:
>$200K
1000-1500 SF
3 bedrooms
1+ baths
2-car garage
1940-1970's construction [[due to percieved quality/character over new construction)
wood floors, updated mechanicals - we can see beyond cosmetic issues and fully intent to update/remodel to our tastes
established neighborhoods that have mature trees, mix of styles, and highly maintained

Homes built from the late 30's to the late 50's are just fine stay away from 60's construction if you can help it and DO NOT purchase anything built in the 70's. The 1970's homes are as a group the worst era for home construction in the Detroit area.

[hybridy]

That is scary. That sums me up but my house is actually from the 20's.

lol..i fancy myself a bit of a real estate whore.

[laphoque]

I never want to mow a lawn again.

[iheartthed]

I never want to mow a lawn again.

Yeah, that's always been my criteria too. I am a millennial who has been mulling whether to buy soon or continue renting, for the record.

[Det_ard]

Not every millennial is grossed out by a Pulte McMansion. Some actually want them. Wrap your mind around that.

Young metro Detroit couples buying big, pricey starter homes


April 4, 2013 |
38 Comments











First-time buyers Bryan Carter, 28, and Lisa Valesano, 30, skipped over traditional starter homes like bungalows to get the house they wanted from the start. They built this 3,100-square-foot home in Macomb Township, priced in the $300,000s. / Andre J. Jackson/Detroit Free Press


By Judy Rose

Detroit Free Press Special Writer




Related Links

• Factors behind young couples buying larger starter homes

Purchase Image Zoom

Fallon Hall of Lathrup Village enjoys her new home with 4-year-old twins Ashtyn, left, and Camryn. The 2,000-square-foot brick home has a marble fireplace, upgraded kitchen and a large yard. It cost $125,000. / Andre J. Jackson/Detroit Free Press






With their wedding day just three weeks off, Bryan Carter, 28, and Lisa Valesano, 30, have the traditional tokens of young people starting a marriage: the rings, the flowers and a place to live.
That place will be their brand-new, 3,100-square-foot house in Macomb Township with hardwood floors and granite countertops.
When did a new, $300,000, four-bedroom house become a starter home?
It's a shift in the housing market that arrived with this millennial generation, according to real estate professionals. Today's young buyers often vault right past their parents' traditional first house -- the tiny bungalow or mini-ranch -- and grab the house they really want.

...

http://www.freep.com/article/2013040...S06/304040181/

[ghettopalmetto]

Not every millennial is grossed out by a Pulte McMansion. Some actually want them. Wrap your mind around that.


http://www.freep.com/article/2013040...S06/304040181/

That's cool, but they've ALWAYS had that option, especially in Detroit. It'd be nice to have options for people who don't fit that mold.

Southeastern Michigan isn't exactly wanting for Pulte subdivisions in the suburbs.

[detroitsgwenivere]

One thing I've noticed, in the descriptions of what the average young person is looking for in a home and community, is that it perfectly fits some of the inner-ring communities to a tee.

For example, Hazel Park has a healthy mix of demographics, good elementary schools, and solid services and infrastructure [[although some of their streets could use replacement). Homes there are absolutely affordable and vary between two-bedroom clubhouses and large, 2.5 story family spots. When you drive down the street, rarely will two homes look alike next to each other, the trees are big and old, and in the summer, children take over the streets to play ball, ride bikes, run through sprinklers, etc. Old school neighbors are tolerant of young people doing what young people do, but have zero tolerance for real crime, they even have a citizen patrol. Everyone knows each other, and it's a great place to start a business.

Oak Park is another place with great attributes that would fit the millenial profile. And Madison Heights. Hell, even Hamtramck would do for those not scared by living next to people wearing head garb.

The problem with living in these cities, and in Detroit? The perception of poverty. For so long, living in Detroit or in the inner ring suburbs carried with it a stigma of being some menial job havin, backwoods, low class person that anybody who cares about appearances wouldn't dare step foot south of 6-96 unless it meant living in the points. For years I talked up Detroit and the 8 mile communities to my high school friends and they would always listen with that blank stare, like: "I hear what your sayin, but my girl really wants to live in Rochester," as their eyes shift around.

If the inner ring suburbs could launch a campaign to reinvent themselves as the new hip places to be, and investors started to rebuild the suburban-like neighborhoods on the fringes of Detroit, than I think that would be a good place to start. And not just any pulte bullshit either[[sorry DPlanner), I mean some well made, energy efficient, heavy character homes. The kind that are obviously something of value.

[Bham1982]

One thing I've noticed, in the descriptions of what the average young person is looking for in a home and community, is that it perfectly fits some of the inner-ring communities to a tee.

I would definitely disagree with your chosen examples.

Both Hazel Park and Oak Park have terrible schools, high crime, and quite obvious decline. There are relatively few amenities, and limited retail/resturants. Outside of Pontiac, they're probably the worst places to live in a county of 1.2 million people.

The reason they're so damn cheap is because most people think these places are less than desirable [[especially south of 9 Mile). And they don't even have charming neighborhoods, or downtown districts, like you see in the Woodward corridor communities.

[DetroitPlanner]

If the inner ring suburbs could launch a campaign to reinvent themselves as the new hip places to be, and investors started to rebuild the suburban-like neighborhoods on the fringes of Detroit, than I think that would be a good place to start. And not just any pulte bullshit either[[sorry DPlanner), I mean some well made, energy efficient, heavy character homes. The kind that are obviously something of value.

I am in no way pushing Pulte. They were the ones who did the study that mentioned that the millennials will be the biggest market ever. This post is how to get those folks to re-invest in existing areas. I find myself in agreement with your statements.

[Cliffy]

I never want to mow a lawn again.

You can always hire someone to do that. A lot of people in my neighborhood pay someone.

[wolverine]

And Ford started out by building Model T's, but by 2007 had grown so used to building the über-profitable SUVs that it didn't care about changing markets, etc., until it slammed them over the head. Pulte has been living fat and happy off of exurban subsidies and greenfield development. Let's see how stupid they've gotten from never having to compete. Let the fun begin.

Exactly. This is one of those times I turn to my facebook census. Seems the millennial homeowners are more interested in older housing stock. If it's something like a ranch home from the 60's-80's it's within close walking distance to a traditional town center. The desire is to simply be closer to the action, not on the bleeding edge of the exurbs where it's quiet and boring. I mean...sure some people like the rural life, but not when it's fabricated in some development brochure with cheesy street names.

Pulte might enter Detroit if they see a market. Plenty of land for massive housing subdivision. And the vinyl siding and front facing garage I'm sure would be acceptable to Detroit standards. Elsewhere? Not a chance. The markets are impossible to enter as there is too much strong competition.

[wolverine]

Not every millennial is grossed out by a Pulte McMansion. Some actually want them. Wrap your mind around that.


http://www.freep.com/article/2013040...S06/304040181/

Of course there will always be a market for some. It's foolish to think that everyone out there wants an urban lifestyle. But in the above case it's a young couple [[about to get married). They'll have a bit more security in their finances by paying off the mortgage together. But recent trends show people marrying and combing finances later than usual and salaries are still lower across the country than where they should be. The salary ranges mentioned in the article are expected for these homebuyers but it's definitely not the financial situation for most recent grads out there. And I think with lessons learned from our past foreclosure crisis that there won't be as big of a number of young home buyers at least until their mid 30's.

I also personally believe that jumping from your parents home to home ownership is a bit risky and stupid and probably can't be done on your own unless you are paying all in cash with zero student debt or having the parents co-sign. Otherwise, rent a few years, save, understand the responsibilities of taking care of a place yourself, build some years of job experience and job security, then buy.

[Cliffy]

Disagree Wolverine. The best advice is to stay at home after graduation for a few years and save if you can. Renting an apartment is a big money drain that you should avoid if possible. I was raised to never rent from anyone and fortunately never had too.

[wolverine]

Disagree Wolverine. The best advice is to stay at home after graduation for a few years and save if you can. Renting an apartment is a big money drain that you should avoid if possible. I was raised to never rent from anyone and fortunately never had too.

Well that works for some people too. After all one of my coworkers lived at home for 4 years. Pretty much saved all his income and then bought a condo with all the money up front, no mortgage.

But staying at home isn't an option for everyone. Often times people can't find the jobs they want within close commuting to their parents.

Also as long as you are able to pay your rents, other bills, and save then I don't see the problem. Ignoring the staying home factor, you must rent when money is tight. Homeownership can be expensive beyond a mortgage. Utilities, maintenance, and taxes can amount to nearly the same cost as rent. People should never consider a mortgage payment as a substitute for rent.

That above reason might even be a slight factor as to why many millennials are willing to pay high rents in big cities. These rents still fall below homeownership costs in suburban and rural areas, so what's the rush?

[detroitsgwenivere]

I would definitely disagree with your chosen examples.

Both Hazel Park and Oak Park have terrible schools, high crime, and quite obvious decline. There are relatively few amenities, and limited retail/resturants. Outside of Pontiac, they're probably the worst places to live in a county of 1.2 million people.

The reason they're so damn cheap is because most people think these places are less than desirable [[especially south of 9 Mile). And they don't even have charming neighborhoods, or downtown districts, like you see in the Woodward corridor communities.

Hahahah. I rest my case.

Rebranding and re-investment. I'm stickin to my story.

[iheartthed]

I also personally believe that jumping from your parents home to home ownership is a bit risky and stupid and probably can't be done on your own unless you are paying all in cash with zero student debt or having the parents co-sign. Otherwise, rent a few years, save, understand the responsibilities of taking care of a place yourself, build some years of job experience and job security, then buy.

I agree. If you've never had to be responsible for paying your own rent before then jumping into home ownership is a huge leap. It's not impossible, but you will have to be extraordinarily disciplined.

Living at home isn't the only way to save money. You can have either have roommates or rent below what you can afford. [[I personally rent a bit below what I can afford.) There's also another trade-off to living at home, especially in the Detroit area: what you don't spend on rent probably gets eaten up in commuting costs.

Most millennials who have the option of living with their parents will probably have to own a car. I don't own a car, I don't have a car note, I don't have a car insurance bill, and I don't have to spend $100/week to fill up my gas tank. If I lived in Detroit I wouldn't be able to do that.