Millennials Are Homeowners Now. What Does This Mean for Your Contracting Business?

Millennials have killed a lot of industries—or at least that’s what the headlines have spent the last decade declaring. Upon entering adulthood following the 2008 recession, they were accused of killing everything from cereal to bars of soap. “Millennials are killing” was such a popular headline format in the 2010s, it soon became a meme on Twitter.

While generational stereotypes can often be unhelpful, generational trends tell us a lot about where certain industries are headed. That’s why we’re seeing op-ed editors direct their attention now to Gen Z, as they increase in both age and spending power.

For the home improvement industry, however, Millennial buying habits have never been more relevant. According to Zillow, 37% of homebuyers are Millennials, making them the largest generation of buyers in 2021. That number is only likely to grow, as Millennials continue to age into their 30s and 40s. (Zillow also found that the average age of homebuyers is 45.)

So who is this upcoming generation of homebuyer, and what impact could they have on your contracting business?

1. IF YOU’RE NOT ONLINE, YOU DON’T EXIST

Today, the world wide web is 33 years old. The oldest Millennial is 41.

That means today’s homebuyer barely remembers a time before the internet. They’re extremely comfortable with digital technology and are used to quick and convenient access to information. Beyond that, 90% of people across generations research their home renovation needs online. Even so, getting online can seem like an expensive and time-consuming task, especially for smaller contractors or those just starting.

Going digital doesn’t have to mean sinking thousands of dollars into a multi-channel digital marketing campaign right off the bat. Focus on building and maintaining a simple website that is easy to navigate.

Your site should quickly deliver useful, up-to-date information about the services you provide and how to get in contact with you. Need a little razzle-dazzle? Throw in a few testimonials from satisfied customers.

If you’ve already got a good website and want to step your online game up, social media could be just the thing. Seventy-two percent of Millennials state that social media is an essential part of their lives, and 75% agree it allows them to interact with brands and companies. A business Facebook page is a great channel for building positive word-of-mouth via Facebook reviews, company mentions, or other user-generated content. 

Finally, be strategic about adopting digital tools that help create the kind of convenient, on-demand experience younger buyers have grown used to. Could your customers benefit from online scheduling? Maybe they’d find it more convenient to receive a digital quote in their email inbox rather than a hand-written paper one. Don’t just adopt technology for technology’s sake—figure out what will truly help you grow your home improvement sales.

2. THEY DON’T PLAY BY THE SAME MONEY RULES AS THEIR PARENTS

Millennial indulgence in avocado toast has been a long-running joke, but the reality is Millennials spend most of their money on the same things as prior generations: housing, food, and retirement.

But unlike previous generations, Millennials have also faced the unique challenges of a) coming into adulthood during the Great Recession, then b) trying to build a life in the face of soaring student loan debt, and now c) navigating an uncertain economic future in the fallout of the pandemic. 

Traditional ways of managing money and building wealth can feel outdated and irrelevant to younger adults when we consider these circumstances. That could explain why Millennials, more than any previous generation, are interested in alternative ways of managing their money, including digital banking, mobile wallets, cryptocurrencies, and Buy Now, Pay Later (BNPL), which is a type of point-of-sale installment loan.

In 2021, 41% of Millenials used BNPL, up 24% from 2019. This tracks with Klarna’s reported average customer age of 33. Clearly this is a generation that is increasingly used to financing smaller purchases like cell phones, holiday shopping trips, and even vacations and travel.

HVAC and home improvement contractors should anticipate that their Millennial homeowners will not only be more comfortable with customer financing solutions, they may just assume it will be an option for any ticket higher than $1,000. By only accepting cash or credit cards as payment options, you risk putting yourself at a competitive disadvantage compared to contractors that offer financing to customers.

3. THEY’RE NOT KILLING HVAC—IT’S JUST NOT A TOP PRIORITY

While most homebuyers will expect to pay for repairs to make a home move-in ready, a recent report from Zillow and Thumbtack reveals that Millennial buyers may grossly underestimate the cost of those repairs. Surveyed Millennials expected move-in repairs to cost $10,000 to $15,000 when in reality, a typical for-sale home could need nearly $30,000 of work.

The report suggests that first-time homebuyers are more likely to underestimate the “unsexy” repairs, preferring to instead focus on projects that allow them to express their personal style (e.g., painting, kitchen remodels). While it’s understandable that buyers would be most excited about repairs that make their new houses feel like them, that same report found that repairing or replacing HVAC systems is the most expensive move-in project.

Failing to account for these more functional repairs can leave homeowners unprepared—both mentally and financially—for the reality of where their money will go. And it’ll likely be you that bears the brunt of customer sticker shock.

This makes it especially important to offer financing to customers. For many Millennial homeowners, this may be their first experience with large home repairs. Couple that with a higher-than-expected price tag, and they’re likely to experience some anxiety. Offering them an estimate with the total cost broken down into monthly payment options provides them with a solution to their problem, and positions you as the hero in the situation rather than a source of added stress.

PUSHING THE INDUSTRY FORWARD

Millennials have spurred companies to adopt new technologies and abandon conventional ways of doing business. The HVAC and home improvement industry will always be relevant, regardless of which generation holds the most spending power.

But by paying attention to generational attitudes and trends, you’re in a better position to serve your customers than competitors that would prefer to stick to how they’ve always done things.