4 Reasons Millennials Are Buying “Fixer Uppers” In This Current Housing Market
Despite a slight cooldown in inflation rates in March 2023, the prices of goods remain on the uptick. Yet, housing demand remains high. Prospective homebuyers aged 40 and below are still very much interested in buying homes, even as the housing market favors the sellers.
Real Estate 101 tells you that property values usually go up, not down. The recent pandemic drove real estate prices way up due to increased demand and supply chain issues. Now, younger generations of homebuyers are increasingly fearful they won’t be able to afford homes soon. Many are now feeling a sense of urgency to close in a house before prices jump even higher.
Thankfully, a middle ground exists for homebuyers who can’t afford brand-new homes. Instead of buying brand-new homes, many millennials are resorting to acquiring fixer-uppers. These are homes badly in need of repair to become habitable again. These properties, which are often half the cost of new homes, are often the best (and sometimes, the only) way to acquire a home before the housing market dries up. According to a National Association of Realtors (NAR) article, 82% of millennial buyers are willing to buy a fixer-upper that needs significant repair.
Reasons Why Millennials Are Buying Fixer-Uppers in Today’s Housing Market
While the main reason for buying fixer-uppers is lower cost, homebuyers are also welcoming the challenge to transform old houses into vibrant new homes. Granted, making these residences livable again isn’t something they can necessarily achieve with a can of paint and some nails. Here’s why today’s young, financially-conscious homeowners are taking the challenge in stride:
Reason 1: Affordability
According to Porch, an online home improvement resource site, fixer-uppers cost $225,000 on average, which is 45% less compared to new homes. In some parts of the US Midwest, about fifteen cities feature fixer-uppers priced at less than $100,000. On the other hand, similar houses located in prominent cities such as Austin (TX) or San Jose (CA) can cost upwards of $1 million. Either way, homes in need of major repairs will significantly go for a much lower listing compared to turnkey homes.
But, do fixer-uppers really go for less once you factor in repair costs? That same Porch article reported that areas that sell fixer-upper homes on the cheap often require expensive repairs that exceed the cost of a brand-new home. In contrast, old houses located in areas with expensive housing will remain a bargain even after repairs. As a rule, always check the local housing market data before you place a bid on a second-hand home.
Reason 2: Personalization Opportunities
Owning a house means having the right to make changes as you see fit. Buying a new home will often negate that privilege, at least for the first few years. With new fixtures and fittings, it doesn’t make fiscal sense for new owners to undertake renovations soon after moving in.
Fixer-uppers, on the other hand, provide tons of opportunities for personalization. Since the house already needs repairs, it’s much easier to apply a personal touch to planned modifications. If you’re going to shell out for repairs, you might make them your own, after all.
Reason 3: Generate a Return on Investment
Rehabilitating a fixer-upper and making it habitable again not only brings back its luster but also primes you to put the property back on the housing market. Now, however, you can list your once-fixer-upper as a newly renovated home. That means you can price your property higher to clean a nice profit.
To ensure a solid return, however, make sure to keep renovation costs under control. The cost of building materials remains on the rise. Meanwhile, labor costs, which take up between 20% to 40% of the repair budget, are also up significantly. Careful planning and preparation can help avoid overruns and prevent delays. Otherwise, you’ll risk watching other sellers wipe their inventories while your renovated-but-overpriced home continues to remain on the market.
Reason 4: Catering to DIY Culture
If there’s a generation that totally embraced the Do-It-Yourself (DIY), it’s Generation Y. Millennials have taken active participation to the next level. They’re known for their ability to perform their own research, their preference for customization and their love for the experiential. A fixer-upper is just what they need to put their creativity and DIY skills to good use. At the same time, millennials cherish the experience of doing the job themselves and record the experience for posterity.
It’s worth noting that applying a bit of common sense and caution is still something that all homebuyers should do. While DIY renovations can apply a personal touch, some preferences can turn out to be highly subjective. Understanding that what you want as a homeowner and what the general housing market wants aren’t always mutual can go a long way. Otherwise, sellers will have to prepare for a new round of renovations to make the fixer-upper a bit more appealing to buyers.
Use Interactivity When Listing Your Property in the Housing Market
Flipping homes can be a profitable venture if you know how to buy low and sell high. At the same time, you’ll need to know how to best tell your story through an engaging sales presentation. Using interactive software such as Ingage can help you show the ins and outs of your property without the need for a private tour.
Ingage offers a cloud-based way to present your story through text, images and video. You can showcase your property in the most engaging way possible with interactive elements. Show them before and after photos that transition. Have them open a door or window by clicking on an image and display what’s inside. Let viewers zoom in and out of your rooms to appreciate the design space. Keep these details conveniently hidden from sight until they want to view them.
Even better, you can send a copy of your presentation to your client via a sharable link. Rather than clogging potential buyers’ inboxes with bulky presentation files, the link will open an online copy of the presentation. Furthermore, built-in analytics features allow you to learn which sections captivated viewers and which areas need more work.
Let Ingage tell the story of your fixer-upper journey. Sign up for a free demo to learn how Ingage can showcase that journey the way it deserves today.