Spencer Rascoff, CEO of Zillow, appeared at the Yahoo Finance All Markets Summit on Sept. 20.
It’s no surprise that millennials are quickly becoming the most powerful force in our economy. By next year, millennials will overtake the Boomer generation as the largest adult generation. And by 2020, millennials will make up 35 percent of the global labor force.
And it’s not just the sheer size of the generation that’s going to significantly shape our economy. Millennials’ status as digital natives is perhaps the biggest power they possess. They’ve grown up with the iPhone and the businesses enabled by it: social media, TaskRabbit, Instacart and Uber. The iPhone’s debut in 2007 symbolized a revolution in consumption; it was the first foray into pressing a button and getting something at your fingertips wherever you are, on demand. Fast-forward to today and 98 percent of 18- to 24-year-olds and 97 percent of 25- to 34-year-olds own a smartphone.
Millennials are accustomed to pushing a button and making magic happen — whether it’s groceries delivered to their doorstep or a ride picking them up within minutes. And while Millennials may have been early adopters of on-demand tech, it’s changed all of our lives. Many of us now manage our lives — everything from dry-cleaning to child care — from the palm of our hand.
Digital natives are driving the real estate market
The real estate industry isn’t insulated from millennials or the digital revolution. Contrary to the assumption that millennials don’t buy homes, they account for 42 percent of all home buyers today. And their search process takes place online. According to our latest research in the Zillow Group Consumer Housing Trends Report, younger buyers and sellers are more likely than any other generation to use online resources in their process, and more than seven in 10 millennial buyers and sellers use mobile resources. They’re looking at smartphone screens as they research and prepare for major life decisions around homeownership.
But shopping for or selling a home is still a stressful experience, especially for younger generations. The majority of sellers are trying to buy another home at the same time, and, among all generations, millennials are most likely to be buying and selling simultaneously. Millennials are also likely to be shopping for a new home in an urban area, where competition can be steep, making the experience even more stressful.
Because they’re accustomed to on-demand experiences, millennials are also willing to trade cost for convenience. Eighty-nine percent of millennials make concessions to sell their home — more than any other generation. On average, they make two concessions, including lowering the sale price or making improvements to the home. They’re willing to be flexible on price because they want a guaranteed, quick close. They want to get to the fun part of moving — finding a new place and settling in.
Consumers demand a better way
But timing the sale of an existing home and the purchase of a new home is a headache and a puzzle for every generation — and the dread of going through the hassle is actually keeping people from having the home they want in a place where they can thrive. We know that consumers want buying and selling a home to be an easier, more seamless experience because that’s what they tell us.
The consumer has changed, opening up a huge new market for a more on-demand real estate experience. Sellers who are juggling the sale of their home with the purchase of another — along with a house full of young kids, dogs, elderly parents and remote properties — find the traditional sales process really tough and need a better way.
Making buying and selling a more seamless experience
In the near future, sellers across the U.S. will be able to weigh on-demand offers for their home versus listing traditionally, and they’ll have guaranteed closing dates. It will be easier to buy and sell simultaneously, and the process will be nearly as seamless as other mobile transactions.
Financing a home will also become streamlined. From our research, we know that getting a mortgage can be the toughest, most painstaking and time-consuming part of the home process — particularly for millennials (64 percent who obtain a mortgage are concerned about qualifying for one), who happen to be the largest portion of first-time buyers (61 percent). The strain is especially hard on younger buyers who put down less than 20 percent and/or rely on family and friends to help cobble together the funds. Because of these pain points and our industry’s increased focus on consumer experience, it’s going to be more seamless to secure a mortgage in the near future.
And on-demand offers and more streamlined mortgages are just the start. What if consumers could get on-demand showings? On-demand cross-country moves? On-demand rental applications and on-demand payments? This is the direction we are headed as an industry, and it’s really exciting.
Human connections will remain key
These on-demand experiences will be enabled by cutting-edge technology, but it doesn’t negate the need for human connection. Incredible agents will continue to flourish as the real estate industry evolves, and the human connection will remain key. Especially during one of the biggest financial transactions of their lives, people want a helping hand. People want a savvy professional who’s going to provide personalized, immediate communication intuitively delivered through preferred channels at the right time — experiences that only the magic of AI can enable. Technology will allow the agents of the future to personalize their human connections elegantly at scale.
Because of millennials and digital nativism, we’re at an inflection point as an industry. We have an opportunity to fuse technology with talent to make buying and selling a home an easier, more delightful experience. Consumers are driving this shift, and they’ll be at the heart of innovation across our industry. Empowered with technology and talented real estate professionals, we can bring one-click magic to real estate. But it starts with a willingness to take big swings, test new concepts and iterate. On-demand offers and streamlined mortgages are a meaningful step on the path to the future of real estate.
Zillow Group created Zillow Offers, an on-demand home-selling option for sellers who want a certain and predictable sale on their timeline. It’s currently available in Phoenix, Atlanta and Las Vegas. Zillow Group also recently announced its plans to acquire Mortgage Lenders of America as part of its commitment to making buying and selling a home a more seamless and delightful experience. Zillow Group is a publicly traded company (Nasdaq: Z, ZG).