Homebuilders are going after millennials
There’s an emerging group of young adults who are tired of paying rent and are seeking a more stable lifestyle. And some of the big builders are trying to appeal to them.
Before their July wedding, Anna Fredrickson and her husband-to-be started looking for their first house.
Their ideal neighborhood was the Heights, but it was too expensive. They looked in Bellaire, but the only thing they could afford was one of the neighborhood’s original homes with nary an upgrade. They went to look at a house in Spring Branch when they stumbled upon a housing area under construction on Hollister, a quiet street with a mix of vacant lots, small businesses and some newly built housing developments.
There, the 28-year-olds found what they were looking for: a new house relatively close to the Inner Loop action and their church, at a price that wouldn’t require them to cash in all their savings.
“It just seems like a better investment,” said Fredrickson, who is now renting an apartment in Greenway Plaza. “It provides some stability for us, but we are open to the future.”
The newlyweds represent an emerging group of homebuyers: millennials tired of paying rent who are seeking a more stable lifestyle — even if they choose to move again in the future, whether for new jobs or a more family-friendly lifestyle, perhaps in the suburbs.
Their numbers are impressive. Millennials, currently ages 18 to 35, have surpassed baby boomers as the nation’s largest living generation. They make up the largest share of homebuyers at 35 percent — a figure that has grown consistently over the past four years, according to a 2016 report on generational trends by the National Association of Realtors.
Yet other studies reveal that more millennials are living at home longer.
For the first time in more than 130 years, 18- to
34-year-olds were “slightly more likely” to be living with their parents than with a spouse or partner in their own homes, according to data from the Pew Research Center released earlier this year.
In 1960, 62 percent of young adults lived with a spouse or partner in their own household, compared with 31.2 percent in 2014, the data showed. The change is largely the result of young Americans postponing marriage.
Housing prices and student debt are also cited as obstacles to homeownership.
Yet there’s another factor that is often overlooked, said Kyle Shelton, a fellow at Rice University’s Kinder Institute for Urban Research. Many millennials come from low-income backgrounds, and homeownership is not an option.
“My guess is the majority of millennials are not young, white, middle-class professionals who have the means to think about it,” Shelton said.
Rising generation
Still, some of the bigger Houston builders have begun putting up housing in transitioning areas to appeal to the rising generation.
The Fredericksons’ home will be built in a gated community called Hollister Oaks. Builder Pulte Homes is hoping to appeal to millennials who want to live close to restaurants and entertainment in the city center and at a relatively affordable price. Houses there start at $295,000.
The houses are smaller than what the company typically builds and are designed to maximize space, said Lindy Oliva, Pulte’s division president for the Houston region.
There are storage spaces underneath the stairs, built-in desks and breakfast benches. There are no long hallways or foyers. The first floors are open immediately beyond the front door.
“These are not houses we build in suburban communities,” Oliva said.
Oliva also said she expects to have some buyers at different stages of their lives.
“One of our floor plans has a master downstairs,” she said. “... We may get some folks who are downsizing.”
Diverse age groups
Shelton said builders should indeed focus on creating places for diverse age groups. Creating communities just for millennials could be shortsighted, he said.
Candice Roman-Boyd, 30, and her 36-year-old husband, Hyghner, rent an apartment near the Galleria. They’ve been wanting to own a house but didn’t want to make long commutes from suburbs.
In March the couple signed a contract for a house in a new-home community, also on Hollister in Spring Branch.
The two-story, threebedroom house with 1,930 square feet is scheduled to be completed by year-end.
Builder KB Home has sold 15 homes in the community, which is still under construction and will have 44 homes when it is completed. The asking prices range from $290,000 to $303,000.
The company said many of the buyers have been millennial couples without children who are tired of paying $2,000 each month in rent. They’ve come from the Heights, the Galleria area and the Energy Corridor.
The couple plan to stay awhile. They don’t have children, but when they do, they hope to send their kids to the public schools in the area.
“When I looked it up, they were not the best rated schools, but I’m thinking it will probably change. I’m hoping it’ll get a little better,” Roman-Boyd said.
In urban neighborhoods zoned to the best schools, “the houses are basically untouchable for a young couple unless you just have a lot of money,” she said.
The Fredricksons were able to negotiate a discount on their home and some free upgrades as the housing market has softened amid the energy downturn.
Fredrickson said even if the economy worsens over the next couple of years, she’s not overly concerned about her new home’s value.
“The price per square foot we bought at won’t take as big of a hit,” she said.