Meet the McMansion for Millennials
There’s been much wailing and gnashing of teeth in the real estate industry over what insiders see as a distressing trend among millennials: They aren’t buying houses at nearly the same rate as generations before them.
“Over the next seven years, there are 10 million millennials who will turn 31, the most common age at which Americans buy their first home,” says Kevin Gillen, senior research fellow at Drexel University’s Lindy Institute for Urban Innovation. “However, as a group, the millennials have a negative savings rate — they collectively owe more in debt than they have in wealth and income.”
In fact, a recent survey by ApartmentList.com found that 78 percent of Philly millennials plan to buy a home, but 72 percent of those are holding off because they can’t afford to. And it’s not just debt that keeps them on the sidelines — there’s also a shortage of homes at prices they can afford.
Stepping into this breach are luxury home builders, of all people, including Horsham-based Toll Brothers, one of the largest such developers in the country. The company, eager to build brand loyalty among future buyers, has been branching out into rental and student housing — and now is aiming to bring young buyers into the fold with a new slate of lower-priced homes. The T-Select line is currently under construction in the Houston and Philly markets.
The homes — set to go to market here by year’s end — are aimed not just at millennials but at first-time and move-up buyers of all kinds, says Chuck Breder, president of Toll’s Eastern Pennsylvania division. “It’s still the Toll luxury experience,” he says, but with fewer custom features, less square footage, and prices that start in the low to mid-$300s, 20 to 30 percent below a typical Toll home. “The choices are more limited than in our typical product,” Breder adds, “but we still offer several packages of standard and upgraded features.”
The new local developments, near the Hatboro and Colmar train stations, are townhouse projects. (Single-family projects are planned for the future.) These first projects may well prove attractive to millennials, who prefer easy access to public transit and, as Jake Dreyfus, of the Philly/Jersey Living team at Keller Williams Realty, says, any location that offers a chance to “conveniently work and play.” Of course, he adds, “Focusing on the price point is certainly a necessary part of the recipe.”
And while $350,000 may not be the bargain-basement price millennials are hoping for, at least some of these next-generation buyers could get a little help from their parents.
Published in the August 2017 issue of Philadelphia magazine.