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The Seventeen, a new development in East Austin, caters to millennial tastes: neutral furnishings, an open floor plan and walkability. (Shutterbug Studios/Strüb Residential)

Millennials, who came of age during the Great Recession and were ridiculed by millionaires for spending their discretionary income on avocado toast, now dominate the Austin real estate market.

"When I perked up and started to take notice was within the last five years, when the profile of the 'first-time homebuyer' changed dramatically from a starter home to some significant homes," said Mark Strüb, owner of the local real estate firm Strüb Residential.

Strüb specializes in affluent millennial clients but notes that millennial buyers of all budgets have different criteria than Gen X and Boomer buyers. In search of mobility, millennials don't want to be bogged down by a 15- or 30-year mortgage and instead are looking for a home to live in for the next three to five years, which is long enough to turn a profit in Austin's hot housing market. "Baby boomers got a job and kept it for 30 years. Same with houses," he said. "That's not the case anymore."

Millennials, who are approximately 22 to 40 years old, accounted for more than 57% of mortgage purchase requests made in Austin last year, according to a recent LendingTree analysis. Local realtors are encouraging sellers to make accommodations to suit their tastes, and developers are building with them in mind, offering smart technologies, energy-efficient systems and absolutely no carpet.

Different priorities

The Austin housing market has grown increasingly expensive and competitive over the course of the pandemic. Austin Board of Realtors President Susan Horton said demand accelerated early this year, when many prospective buyers, including millennials, sought out more square footage after months of remote work, online learning or living on top of roommates.

Horton's millennial clients tend to prioritize houses that offer flexibility, walkability, sustainability and proximity to the urban core and green spaces. She recently helped a local couple, both in their mid-thirties, purchase their first home. Although they don't have kids, they were looking for a four-bedroom: one for them, two for offices and one for guests.

In addition to different tastes, millennials tend to have different financial circumstances than those of earlier generations, largely due to ballooning student debt. Strüb said this deters some from purchasing a home because they assume they'll need to put down a large down payment. His clients are often surprised to learn they can buy a home with as little as 3% down and still maintain a monthly housing payment similar to what they paid in rent.

This is especially true among Strüb's affluent millennial clients, who are typically first-time home buyers relocating from more expensive markets, such as New York City and San Francisco. In Austin, their money goes much further. "They've been living in a tiny one-bedroom, grinding all day, working 12 hours, to build up a career that, when they pour it here in Austin, it is kind of the dream," he said.

Building for the future

Millennials are also dictating the types of homes being built in and around Austin. Rastegar Property Company is developing 1,500 homes in Kyle with millennials homebuyers in mind, especially those who may soon take jobs at the forthcoming Tesla Gigafactory in Southeast Travis County. This means touchless entry, Nest thermostats, acres of green space and Instagrammable moments.

This rendering shows a town square at a Rastegar development, where millennial residents can gather, shop and enjoy other amenities associated with urban life. (Rastegar Property Company)

CEO Ari Rastegar says he's building to suit the tastes of millennials. "(Millennials) want experiences," he said.

Strüb has noticed this trend, too. He is developing the Seventeen, a California-themed, walkable subdivision in East Austin with three- and four-bedroom homes starting at $817,000. Almost every buyer is a millennial. "We're a young town," he said. "I think the (millennial) influence (on the home market) is here because that's kind of who rules the roost anyway."


(Austonia file photo)

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