Millennials are moving out of their parents’ basements and into their own homes. The average age of a first-time home buyer is 34, according to online listing service Zillow. This new generation of buyers enters the real estate market with high expectations, but soon collides with reality, often in the form of their HVAC systems.
Zillow partnered with home management platform Thumbtack to survey 1,000 millennials about their expectations for work done to a new home and compared that with the sites’ own real-life data. The survey found that the average millennial expects to pay between $10,000 and $15,000 to make a home move-in ready. However, the data shows new homeowners should actually expect to spend about $26,900 on these projects. Evaluating, repairing, or replacing HVAC systems is the most expensive move-in project, costing $3,615 on average nationwide, according to Zillow.
“This research suggests first-time homebuyers typically underestimate the costs of the ‘unsexy’ projects they may have to tackle before they even move in," said Amanda Pendleton, Zillow’s home trends expert.
Unprepared For Cost of HVAC System
That’s unwelcome news for a generation that grew up watching home renovation shows and spends hours in Pinterest. The survey shows millennial homebuyers are most excited to tackle interior painting, followed closely by wallpaper installation and kitchen updates like remodels and renovations. They are least excited about functional repairs. They’ll gladly spend money on the perfect faucet, but don’t want to pay to repair the pipes leading to that faucet.
Joanna Buglewicz, co-owner and president of Green Valley Cooling and Heating in Green Valley, Arizona, isn’t surprised. At 38, Buglewicz is a millennial herself, and she said her cohort wants an aesthetically pleasing home before everything else. Even if they get money taken off the sales price to replace an HVAC system, they’ll spend that money elsewhere. When something does go wrong, they are unprepared both mentally and financially.
“When they have need of a replacement, they’re blown away by how expensive the HVAC system is,” Buglewicz said.
This makes offering financing crucial to landing their business, she said. It’s a different story with older buyers. They know how much an HVAC repair costs, and they often have funds on hand to pay for it.
Authenticity From The Salvage Yard
Green Valley serves two communities with very different age demographics in its market, which lies south of Tucson. Sahuarita is a young community with an average age of 36. Green Valley is a retirement community with an average age of 78. Buglewicz said older buyers remember a time when HVAC itself was considered a luxury.
Millennials put a lot of faith in reviews, Buglewicz said. She said that despite her age, she finds it challenging to sell HVAC to millennial buyers. Green Valley’s millennial salespeople have reported the same experience. So have the younger salespeople at Petri Plumbing and Heating, said owner Michael Petri.
Petri’s family firm has been serving clients in New York City for more than 100 years. There have been a lot of changes in just the past few decades, especially when it comes to ownership. One owner used to own all the units in a building. Petri Plumbing and Heating would work with that owner and install the same equipment in each unit. Today, they all have individual owners.
And those owners, especially the younger ones, want to express themselves. They also want authenticity. Since New York brownstones still use steam heat, this often means refurbishing old radiators. Petri finds vintage radiators in scrap yards and sandblasts them back into condition so they at least look good.
“The integrity of the radiator, I don’t know,” he said. “We won’t know until we try it.”
Sometimes there’s a pinhole leak that makes the radiator unusable. But clients worry more about form than function. Petri once had a client who bought several radiators from an old home. Each weighed 800 pounds. Petri had to remove windows and hire a piano hauler to bring them up the front of the building.
Get Ready For Gen Z
Radiators are one area where HVAC plays a role in home décor. Petri said the panel radiators common in Europe offer a sleek look and can even become the basis for a room’s color scheme. Other than that, it’s out of sight and out of mind for most young homeowners.
But they do expect to at least have HVAC when they move in. Petri recommends that home sellers install central a/c before putting their property on the market. For those that lack the ductwork, Petri said they should install a ductless mini-split system. Over one-third of millennial homeowners surveyed by real estate Coldwell Banker said they are more likely to want to move to an upgraded home compared to other generations, particularly Boomers.
Just when contractors finally figure out how to sell HVAC systems to millennials, they’ll have to start working with Gen Z. These are the young people born around the turn of the century who are just entering adulthood. A large number of those surveyed by Realtor.com say they plan on entering the housing market within the next five years.
That may seem ambitious, but they will be here quickly. The survey found nearly half of the Gen Z respondents are already saving toward buying a home. The big event that shaped millennials was the housing bust, which made many of them worry about their finances. For Gen Z, it’s the pandemic, which makes owning a home seem more appealing. Realtor.com expects Gen Z to start buying homes earlier than the previous generation.