Millennial Home Buyers Are Changing the Home-Buying Process: 39% of Millennials Are Comfortable Buying a Home Online

Published Sept. 27, 2021
Jack Caporal
By: Jack Caporal

Our Research Expert

A woman looking at her finances with a laptop and phone.

Image source: Getty Images

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Millennials have made up the largest group of home buyers for a few years now, and they’ve begun to change the home-buying process.

As digital natives, millennials are more comfortable finding and buying a home online compared to older generations, and they're more interested in what influencers and celebrities have to say.

The most radical change in the home-buying process is the growth of iBuyers -- companies that provide consumers a direct, instant, cash offer to buy a home outright.

As digitally savvy millennials continue to make their imprint on the housing market and Gen Zers age toward typical home-buying years, tracking how the home-buying process is changing will be crucial.

Key findings

  • Nearly 40% of millennials would be comfortable buying a home entirely online, a higher percentage than any other generation.
  • Just 60% of millennials and Gen Z home buyers view living close to work as an important consideration. About a fifth have no preference between living in a big city or remote area.
  • About 70% of millennials and Gen Z home buyers discussed their plans with their parents. 27% said influencers and celebrities affected their home-buying plans.
  • iBuyers accounted for roughly 1% of home purchases in the second quarter of 2021. In 2018, they accounted for 0.2%.

39% percent of millennials are comfortable buying a home entirely online

When it comes to buying a home entirely online, 39% of millennials said they would be comfortable doing so, as did 36% of Gen Zers, according to a survey from Zillow.

Older generations are skeptical about buying a home online. Just 19% of Gen Xers and 7% of baby boomers reported that they would be comfortable buying a home online.

Buying a home completely online can seem daunting, but it’s a method that’s slowly catching on. That phenomenon will be explored later in this article.

Generation Comfortable buying a home entirely online
Total 23%
Gen Z 36%
Millennial 39%
Gen X 19%
Baby Boomers 7%
Silent Generation 7%
Data source: Zillow (2021). "Americans Want Digital Tools to Complement Traditional Home Shopping."

60% of Gen Z and millennial homeowners found their home online

While the idea of buying a home completely online hasn’t caught on with a majority of Americans, most buyers under 56 years of age found their home online, per the National Association of Realtors.

About 60% of Gen Zers and millennials found the home they purchased online. 46% of those aged 56–65 and 40% of those aged 66–74 said they found their home online. Those older cohorts were more likely than younger generations to have found a home through a real estate agent, though they were still more likely to have found their home on the internet.

Homebuyer age group Found home they purchased on the internet Found home they purchased via real estate agent
22–30 61% 24%
31–40 60% 23%
41–55 54% 26%
56–65 46% 32%
66–74 40% 34%
75–95 30% 38%
All 51% 28%
Data source: National Association of Realtors (2021). "NAR Home Buyer and Seller Generational Trends."

Accordingly, the most popular first step taken in the home-buying process across all age groups was to look online for properties for sale. The older the home buyer, the more likely they were to begin the process with contacting a real estate agent, although differences between age cohorts were marginal.

Gen Zers and millennials were more likely than other cohorts to begin their home-buying process by looking for information about the process online.

First steps taken during the home buying process All buyers Homebuyers ages 22–30 Homebuyers ages 31–40 Homebuyers ages 41–55 Homebuyers ages 56–65 Homebuyers ages 66–74 Homebuyers ages 75–95
Looked online for properties for sale 43% 33% 43% 48% 48% 42% 36%
Contacted a real estate agent 18% 15% 16% 17% 18% 23% 24%
Looked online for information about the home buying process 9% 17% 11% 7% 6% 6% 3%
Contacted a bank or mortgage lender 7% 8% 9% 9% 7% 3% 4%
Talked with a friend or relative about home buying process 7% 16% 8% 5% 3% 4% 5%
Data source: National Association of Realtors (2021). "NAR Home Buyer and Seller Generational Trends."

Americans find virtual tours, digital floor plans, and property and real estate agent information most useful

The majority of Americans find a variety of digital tools are useful in assisting them with home buying, according to a Zillow survey.

Almost 80% said they would like to use 3D virtual tours and digital floor plans, and three-fourths said they find email notifications from websites or apps useful. Just over two-thirds reported video tours with an agent and the ability to unlock a home with a phone and tour on their own time as useful features.

According to Zillow, younger generations were more likely to find utility in these tools than older generations.

Digital homebuying tool Percentage of buyers who would like to use this tool
3D virtual tour 79%
Digital floor plan 79%
Email notifications 75%
Video tour with an agent 68%
Unlock with phone and tour on own time 68%
Data source: Zillow (2021). "Americans Want Digital Tools to Complement Traditional Home Shopping."

That trend is reflected in data from the National Association of Realtors, which shows fewer older Americans finding online tools like virtual tours, interactive maps, videos, virtual open houses, and virtual listing appointments to be very useful compared to younger Americans.

Website feature desired All buyers Homebuyers ages 22–30 Homebuyers ages 31–40 Homebuyers ages 41–55 Homebuyers ages 56–65 Homebuyers ages 66–74 Homebuyers ages 75–95
Photos 89% 92% 92% 91% 84% 77% 67%
Detailed information about properties for sale 86% 88% 88% 86% 82% 78% 72%
Floor plans 67% 69% 73% 69% 59% 61% 58%
Real estate agent contact information 63% 67% 63% 64% 57% 62% 58%
Virtual tours 58% 60% 63% 61% 52% 47% 43%
Detailed information about recently sold properties 54% 61% 63% 59% 50% 41% 32%
Neighborhood information 53% 61% 63% 59% 43% 40% 36%
Pending sales/contract status 53% 63% 62% 57% 42% 38% 24%
Interactive maps 52% 59% 62% 56% 43% 35% 26%
Videos 47% 55% 55% 52% 39% 36% 25%
Information about upcoming open houses 46% 54% 55% 52% 37% 31% 17%
Virtual open houses 38% 45% 46% 43% 30% 26% 20%
Virtual listing appointment 35% 44% 45% 40% 25% 22% 11%
Real estate news or articles 34% 43% 43% 39% 25% 22% 10%
Data source: National Association of Realtors (2021). “NAR Home Buyer and Seller Generational Trends.” Note: "website feature desired" calculated as percent of respondents who used the internet to search for a home ranking feature as "very useful."

61% of millennial and Gen Z home buyers view living close to work as a critical consideration

Deciding where to live is an important part of the home-buying process. According to a survey from Zillow, 61% of millennials and Gen Zers still see living close to work as extremely or very important, and a similar percentage find a short commute to be important as well.

That a majority of millennials and Gen Zers find it important to live close to work and have a short commute is notable given that the pandemic has accelerated the work-from-home trend and given workers from many industries new flexibility in where to live.

Extremely or very important Millennials and members of Gen Z
Living close to work 61%
A short commute 63%
Data source: Zillow (2021). "Young Adults Who Saved During the Pandemic Likely to Put it Toward a Down Payment."

20% of millennial and Gen Z home buyers have no preference between big cities or remote areas

Millennials and Gen Zers are somewhat undecided on whether they would like to buy a home in a remote area or big city, with 20% having no preference between the two.

Neither remote areas or big cities were preferred by a majority of Millennials or Gen Zers. Remote areas were preferred by 44% of those generations while big cities had the support of 36%.

Preferred area to live in Millennials and members of Gen Z
Remote area 44%
Big city 36%
No preference 20%
Data source: Zillow (2021). "Young Adults Who Saved During the Pandemic Likely to Put it Toward a Down Payment."

27% of millennials reported that influencers or celebrities impacted their housing decisions

Just over a quarter of millennials reported that influencers or celebrities affected their housing decisions, according to a survey from Zillow.

Male millennials and Gen Zers were 11% more likely than female millennials and Gen Zers to report that influencers and celebrities inspired them to make certain housing decisions.

Group Influencers or celebrities have inspired me to make certain housing decisions, like buying a home
Total 27%
Gen Z 25%
Millennial 27%
Women 21%
Men 32%
Data source: Zillow (2021). "Young Adults Who Saved During the Pandemic Likely to Put it Toward a Down Payment." Note: "women" and "men" categories include only millennials and members of Gen Z.

Males assigning higher importance to influencers than females when it comes to financial decisions isn’t unique to home buying -- it extends to investing as well. Motley Fool research on millennial and Gen Z investors found that males placed slightly more importance on social media buzz and influencers than females did when determining whether to buy a stock, for example.

71% of Gen Z and millennials discussed their home-buying plans with their parents; only 16% discussed with social media followers

While in the home-buying process, 71% of millennials and Gen Zers turned to their parents for advice and 61% discussed decisions with their friends.

Despite influencers making an impact on a little bit more than a quarter of millennial and Gen Zers’ housing decisions, only 16% of those generations turned to social media to discuss the home buying process.

Decision making process around purchasing a home Millennials and members of Gen Z
Discussed with parents 71%
Discussed with friends 61%
Discussed with siblings 50%
Discussed with grandparents 29%
Discussed with social media followers 16%
Data source: Zillow (2021). "Young Adults Who Saved During the Pandemic Likely to Put it Toward a Down Payment."

64% of millennials have at least one regret about purchasing a home, with maintenance costs being the most common

Even as millennials make use of new technology in the home-buying process and have newfound freedom in where to live, 64% still have at least one regret about purchasing a home, according to a Bankrate survey.

Maintenance costs were the most cited regret among all generations, registering with 21% of millennials, 17% of Gen X, and 13% of baby boomers.

Over 10% of millennials believe that their mortgage payments or rates are too high; that they overpaid; or that their house is too big, too small, or in a bad location. Less than 5% of baby boomers registered those regrets, except for their house being too small or in an undesirable location.

Homebuying regret Millennials Gen X Baby boomers
Maintenance costs too much 21% 17% 13%
Mortgage payment too high 13% 5% 2%
Unhappy with mortgage rate 12% 7% 4%
Don't think it's a good investment 9% 3% 3%
Overpaid 13% 5% 3%
House is too big 14% 6% 3%
House is too small 14% 10% 7%
Bad location 15% 8% 5%
Data source: Bankrate (2021). "Nearly two-thirds of millennials have homebuyer regrets, survey finds."

iBuyers accounted for about 1% of home purchases in the second quarter of 2021

The rise of iBuyers -- companies that bypass real estate agents to make instant all-cash offers directly to buyers or sellers -- is an emerging trend with the potential to reshape how homes are bought and sold.

One percent of homes sold in the second quarter of 2021 were done through iBuyers, up from 0.6% in the first quarter and 0.25% in 2020.

Line chart showing the rise of iBuyer market share from 0.2% in 2018 to 1% in mid-2021
Year 2018 2019 2020 2021Q1 2021Q2
iBuyer market share 0.20% 0.50% 0.25% 0.60% 1%
Data source: Mike DelPrete (2021). "2021 Emerging Models in Real Estate," Zillow (2021). "iBuyers Are Helping People Move in Record Numbers."

iBuyers -- short for "instant buyers" -- generally use cash to purchase a home as-is, sight unseen, without a real estate agent or broker involved. This helps to cut out fees like closing costs and commissions. iBuyers use algorithms to determine their offers.

Some iBuyers can make an offer to buy a home within 24 hours and close in 14 days. By comparison, it took up to 70 days on average to sell a house in 2020, according to Zillow. By selling to an iBuyer, however, homeowners trade finding the best offer on the market for speed and convenience.

Selling to an iBuyer also comes with service fees, which for some companies can reach 5%. The average real estate agent commission is 5% to 6%.

Selling a home through traditional means can also require funds to be spent on repairs and staging, while the latter isn’t required for iBuyers who will make repairs after purchasing.

iBuyers operate only in certain markets, with Phoenix and Atlanta home to the most activity.

Millennials are changing how homes are bought and sold

Millennials, the largest group of home buyers, are changing the home-buying process.

They expect online tools to help them through their home buying journey and are more comfortable with the idea of buying a home entirely online than any other generation.

Alongside the home-buying process moving online is the slow-but-steady growth of iBuyers, which have the potential to completely reshape the home-buying process.

Despite finding utility in new home-buying tools, almost two-thirds of millennial homeowners have at least one regret about purchasing a home, which indicates the home-buying process is far from perfect.

One certainty is that millennials -- and eventually Gen Zers -- will continue to shape the home-buying process alongside companies that aim to disrupt the way consumers have traditionally operated in the real estate market.

Sources:

Many or all of the products here are from our partners that compensate us. It’s how we make money. But our editorial integrity ensures our experts’ opinions aren’t influenced by compensation. Terms may apply to offers listed on this page.