Sunday, November 15, 2015

Millennials Causing Problems for Modular Home Builders

Millennials are entering the homeowner market but with specific desires and budgets and have put off building their first home like no other generation in history.

Millennials, born in the 1980s and 1990s, expect a little space between neighbors, and they don’t like cookie-cutter homes. They want open floor plans, less carpet and seamless indoor/outdoor living. Only problem - they currently aren't in a position to get these.

College educated Millennials have restraints on their budgets that force them to look at existing homes in established neighborhoods — and that’s creating a challenge for modular homebuilders who desperately want to attract this generation that is soon to overtake baby boomers in size.

My own family gives a  real life example of what is facing today’s Millennial. When my daughter and her husband decided to move to the Baltimore, MD area a few years ago I asked them if they would consider building a modular home. They liked the idea until reality set in.

They eventually bought a beautiful 1960’s townhouse in a well maintained neighborhood but only after looking at building their dream home.

What they encountered is not localized to their area but is prevalent in every part of the US.

The first thing they found was the scarcity of single family lots close to their workplaces and the ones they did find started at $100,000 and were actually lots that had been cleared of an abandoned or burned out home.

Next came impact fees, building permit costs, sprinklers and many other fees and costs that existing homes don’t have. They looked at a new home that was built in a new community from one of the big tract builders and found the price extremely high.

The townhouse they bought was closer to their work, had established schools that my grandsons could walk to and shopping is only a few minutes away.

All that cost them under $180,000 while the price they got for a new townhouse 12 miles away "in the country" was $259,000.

Boomers and Gen X’ers still make up a majority of new homes built by modular home builders but as the Boomer market begins to cool and the Gen X market isn’t quite ready to downsize and build a new home, the Millennials may not come on line fast enough to buy new custom homes to fill the void.

The future for both site and modular single family home builders doesn’t look good unless some things change to make it easier for Millennials to build custom built homes. Low mortgage rates alone are not the answer.

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