Millennial Generation Buys Into the American Dream
By Lorrie Baumann
The Millennial generation has reached a point at which its members are likely to get really serious about spending money to equip their kitchen. They’re buying houses.
This good news was delivered by market researcher Marsha Everton this year at the International Home + Housewares Show. The Millennial generation is comprised of people born between 1980 and 1995, so that they’re turning 23 to 38 this year. Everton is a Principal in the AIMsights Group, marketing consulting company experts in Millennial-Baby Boomer intergenerational dynamics. She’s one of those who’ve been expecting that the Millennial generation has the capacity to move the market, largely because it’s a very large cohort but also because it’s a generation heavily influenced by advanced technology. “At long last, the Millennials are starting to buy homes. They’re creating a tidal wave,” she said. “What we know from the stories is that when someone buys a house, their priorities change. They tell us stories of spending more time and money at Lowe’s and Home Depot and spending less money on clothing. It just makes sense. … They’re here. They have arrived. It’s time to get excited about their roles in the housewares industry.”
Everton has one piece of advice for kitchenware retailers: It’s important to think about your customers in terms of their life stages rather than just as members of a particular generation and to remember that your customers — even those tech-savvy Millennials — are looking for advice from real people, and they’re talking to each other as well as to you. “The other thing that really struck me in the research is how much this group, this generation, wants to do things in person,” she said. “Technology access changes everything, and yet I was so surprised that when it came to choosing what to do in their renovations, how many of them reverted to real live showrooms with real people for real conversations — how much, rather than looking for some sort of anonymous review on line, they still reach out to a friend for advice. They’re actually talking to each other.”
According to federal Bureau of Labor Statistics numbers, homeowners spend about twice as much as renters on products from their homes. On average, homeowners spend about $3,800 a year on home products in three main categories: household operations, housekeeping supplies and household furnishings and equipment, which includes things like small kitchen appliances and cooking tools. The home operations category includes services, such as home security services, and Everton noted that, since many of this kind of service can now be automated with smart home equipment, many of these products were being aggressively marketed on the IH+HS show floor.
More than one in three members of the Millennial generation have already bought their own homes, with that number expected to rise over time. “Home ownership for Millennials is already at 36 percent percent, and we can reasonably anticipate that this rate will grow to the 59 percent rate of 35-44 year old age group and keep growing,” Everton said. “Homeowners spend more than twice as much as renters on housewares. This is a huge impact on the industry.”
This is part of a pattern in which there are three key steps to adulthood, said Everton. Those are getting married, having children and buying a home. “These are three very expensive things to do. What we hear in the stories and observe is that most of the Millennials are financially savvy. They do one of those things at a time,” she said. “They don’t always do them in the same order. Some of them buy the home first. Some of them get married. Some of them have children. They don’t do them all in the same year.”
While demographers once considered people in their mid-20s as full adults, likely to be married and starting their families, American adults have been putting off marriage a little longer in recent years. By 2016, the average age of first marriage was 30 for men and 27 for women, a seven-year shift from 1960 for both genders. Demographers have also noted that there’s a gap in the marriage rates — defined as legal marriage, with a marriage certificate — between those who have a college education and those who don’t. In 2016, only 50 percent of adults over 25 who had a high school education were married, while 65 percent of college-educated adults were married.
Among all Millennials; only 23 percent of those between 18 and 31 are currently married, but 36 percent own a house. About 36 percent of them have a college degree. With a median income of just under $34,000, it’s evident that they’re still building their earning power. When you look just at those who are buying houses, though, you see that 66 percent of Millennial home-buyers are married. They’re overwhelmingly white, and they have a median household income of about $82,000.
Among the total U.S. population, home owners have a median age of 52. As a group, they’re more likely to be married and to have a college degree than people who do not own their own homes. Their median household income is about $62,000. “We’re very careful because there are many variables, but these Millennials who are buying houses have more income. They have more money to spend. By targeting homeowners, you’re targeting the high earners. This is especially true in the larger metropolitan areas,” Everton said, adding that some of the racial disparity between those who are buying houses and those who are renting might be because ethnic minorities are more highly concentrated in urban areas where home prices tend to be higher. But, she says, it also indicates that the United States is still not a country where everyone has the same opportunities.
Millennial home-buyers are also likely to have a pet, and these pets are treated like they’re members of the family. More than half of Millennial home-buyers do have a pet, which is much higher than the rate of overall pet ownership, and the needs of the pets are taken into account as part of the home-buying decision, Everton said.
Millennials are likely to invest in renovations after they’ve bought their home. About 69 percent of them will invest in minor renovations like painting, but 45 percent will undertake major renovations like a kitchen remodel. More than half of them will do the work themselves. “Millennials are the handyman generation,” Everton said. Millennials tend to like white and gray as their primary kitchen colors, with those colors showing up everywhere in the kitchen – on cabinets, backsplashes and countertops, for example. They prefer wood and quartz over granite, which is downtrending. For their appliances, they like stainless steel, with black stainless steel also starting to gain a following. “They talk about their kitchen as being the heart of the home,” Everton said. “They have a vision that this is where their family will gather, memories will be made, and they’ll feed the soul as well as the body.”
