Real Estate

Demographic Trends Affecting Housing – Part I

dianahill
Diana Hill
Professional Real Estate Investor Instructor

As we start to face the end of 2014 I have decided to do a couple of series on various trends that effect the Real Estate industry.

What will create opportunities in the future for Real Estate? People will always need a place to live, work and shop. We have seen a big change in the decades since WWII and massive suburbanization has been in vogue. Will this be the decade of urbanization???????? Will this be the decade of renters????

Let’s look at some demographic changes and trends that might give us a view into that future.

There have been signs of new trends for years. This last recession has strengthened the trends and affected where people live, whether they own or rent and the size and style of the homes they choose. It is clear that these choices in the future, whether by desire or necessity, will be different than what we’ve seen in recent history  (the last 50 years).

The four major demographic waves in the U.S. to watch for are:

  • Aging Baby Boomers (the oldest of which are now in their late-sixties)
  • Younger Baby Boomers (youngest of which are in their early fifties)
  • Kids of the Baby Boomers: Groups called, Generation X, Generation Y, the Millennials, the Next Generation, the Net Generation, or the Echo Boomers (comprise over one half of the US Population).
  • Immigrants, their children and grandchildren, who are growing more rapidly than “native born” households.

Let’s start at the top and first examine “Aging Baby Boomers.” There are 78 million Baby Boomers; the oldest became 65 in 2011. Starting at that point the population of “senior citizens” is projected to grow faster than the total population of the US. We will refer to this group as “Aging Baby Boomers.” They only represent one third of the total group.

Boomers have redefined every age they have entered and the older ones will do so again. They don’t see themselves as aging; instead “60 is the new 50” and so on. Most are pushing back retirement for years both because they are working at jobs they enjoy and because some need to rebuild their retirement.

So what kind of housing will they be looking for and where?

Free WorkshopOne major change we see is that these “Aging Boomers” aren’t flocking to the Sun Belt areas like their parents did. They are choosing instead to move closer to their children, and more importantly, their grandchildren. This can often mean several residences, which are smaller and need much less maintenance.

This has become a very personal issue for me and my husband. Our oldest son and daughter-in-law will move back to Dallas where they went to College. They plan on starting their family there after they complete working in London for 3 years. Whereas our younger son who recently got engaged, started his career in commercial real estate in Southern CAL and won’t be leaving. I’m really trying to help my husband get his head around the fact that our five bedroom house is no longer necessary and that we need a residence in Southern CAL and in Dallas.

A survey conducted by RCLCO (Robert Charles Lesser & Co – an independent economic real estate advisory service firm with 40 years of experience) found that 75% of retiring Boomers said that they want to live in mixed age and mixed use communities in urban settings. Not all will want to move to urban cities, but walkable urbanized suburban town centers will start to see an influx of “Aging Boomers” as well. We’ll see more of this movement as soon as the “Aging Boomers” can sell their suburban homes.

We’ll look at the YOUNGER Baby Boomers next week.

Great Fortune,

Diana Hill
dhill@tradingacademy.com

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