Last year, when Jake and Kristen O'Toole set out to buy their first home, competition was fierce for what they wanted: a small house in a bike-friendly Minneapolis neighborhood. They made offers on five houses — all over asking price — before finally landing their 1921 bungalow in Longfellow.

"Our biggest thing was location," said Jake.

The couple, both 29, share one car, which they try to use as little as possible, so they wanted easy access to bike routes and public transportation. Because they're concerned about climate change and try to limit their carbon footprint, they looked for a small house with a compact yard. Oh, and the house had to be "turnkey — not a fixer-upper," said Kristen.

Meanwhile in Minnetonka, Katherine Page has been trying to sell the five-bedroom custom Tudor-style house that she and her husband built in 1987.

"I love my house," she said, "but we want to downsize. The big house and big yard are a lot of work."

The couple spent almost $20,000 on upgrades to attract a buyer last year, but didn't get a single offer after six months on the market. They recently re-listed it at a reduced price.

Kristen and Jake O’Toole (and their dog Penny) bought a 1921 bungalow in the Longfellow neighborhood in Minneapolis.

The O'Tooles and the Pages are examples of an imbalance in the housing market.

Millions of millennials (the generation born between 1981 and 1996) are entering prime home-buying age, creating an intense demand for starter homes in popular urban neighborhoods. At the same time, millions of baby boomers are trying to downsize from the homes where they raised their families, creating a supply of big suburban homes.

But tastes and lifestyles have shifted in the decades since many of those homes were built. Today, buyers of all ages — but especially millennials — tend to prefer smaller, more modern-style houses in walkable neighborhoods near urban amenities. Millennials gravitate to clean lines, casual living and open floor plans, and view many baby boomers' homes as too big, too formal and too traditional, with unnecessary rooms and details.

The mismatch in the market is most acute in the Sun Belt, where many retirees built enormous, elaborate dream homes, according to a recent report in the Wall Street Journal. But it's also having an impact in the Twin Cities.

Wooing millennials

Even the view of "home" appears to have undergone a generational shift.

While baby boomers viewed their home as their castle, and liked to entertain there, "millennials would rather go out and do stuff," said real estate agent Carol Paulsen of Coldwell Banker Burnet, Page's sister and listing agent. "Their home is their base for traveling, excursions and trips to breweries. They'd rather have less to clean and keep up."

They don't want fixer-uppers. "They want everything done and ready to go, with updated kitchens and bathrooms," said Paulsen. And many don't care for the natural woodwork prized by their parents' generation. "They don't like brown wood."

To respond to the change in demand, sellers are investing time and money on new finishes, colors and fixtures — all designed to appeal to millennial buyers. "We have a number of stagers out there working like crazy, to get the Pottery Barn look, the Ikea look," Paulsen said.

One of those stagers is interior designer Jayne Morrison, Morrison Interiors, Plymouth, who has developed a side niche staging homes. "A lot of it is staging baby boomers' homes for millennials — the big house built in the '90s," she said.

She advises clients to strip wallpaper, change out shiny brass hardware and paint woodwork. In some homes, she recommends sellers replace their old furniture with new modern styles, so that millennials can better picture themselves living in the home.

"I ask, 'Are you planning to buy new furniture after you move?' If they say 'Yes,' I say, 'Let's get it now so it looks up to date.' "

On Morrison's advice, Page removed some large traditional furniture from her home and had her golden oak kitchen cabinets painted soft white.

"Oak was popular when we built, but now people say there's way too much oak," she said. But so far she's resisted painting her oak-paneled study. "That's painful," she said.

Page thinks her home has a lot to offer — a great location close to Ridgedale, three fireplaces, walk-in closets in all bedrooms, plus cedar closets, but she added, "I don't think millennials even know what that is."

Millennial priorities

Mike and Lily Schenkenberg, shown with their dog Gio, bought this smartly updated modern house which was perfect for an upsize move from a a condominium.

Michael and Lily Shenkenberg, both 29, looked at some 1990s suburban houses when they were house-hunting earlier this year, but Lily found them "too woody."

"I like a modern, clean look," she said.

They ended up buying a 1960s split-level in Edina that had been completely remodeled.

"We wanted open-concept," said Michael. "This was nicely updated and not too big" — at about 2,600 square feet. Another plus: "All the technology was updated," he said. The air-conditioning, garage door and music speakers can be controlled via app.

And their home's location is close enough to downtown Minneapolis, where Lily works and where most of their friends still live. "We have a few friends in St. Louis Park but nobody has migrated this far," she said.

Location also was a top priority for Robin Viele and Nick Aspholm, both 31, when they bought their first house in northeast Minneapolis two years ago. "I wanted to walk to places we could enjoy going to," Viele said. There's a grocery store two blocks away, plus "all kinds of bars and restaurants."

And even though their house was built in 1908, it has a semi-open floor plan, thanks to the previous owners who had removed walls and widened archways. "That was a plus," Viele said. "We've hosted Thanksgiving for our families."

Jake and Kristen O'Toole, the young bungalow owners, limited their home search to Minneapolis. "We really like Longfellow," said Jake of their neighborhood, with its walkable proximity to restaurants and public transit.

Robin Viele (left) and her husband Nick Aspholm (right) are photographed in front of their home.

The house's small size — about 800 square feet — was a plus, not a minus. "I wanted it to be manageable, streamlined," Kristen said. "I didn't want to be saddled with an outrageous mortgage. I worked at a housing center after the recession ... that stuck with me." A smaller house payment gives them the freedom to support causes they believe in, such as dealing with climate change, she said.

While this is their first house, they don't consider this their "starter house."

"I never plan on getting a big or fancy house," Jake said. "I'm scarred by the recession."