As we head into the end of this series it’s clear there will be an increased demand for housing, but that housing may look different than in decades past and home ownership will have different connotations. Remember, people will always need a place to live, work and shop; they may look different tomorrow than today, but they will exist.
For Generation Y, the children of younger baby boomers, there are no precise dates when Gen Y starts and ends, however, it’s considered birth years early 1980’s to early 1999. With that being said, there are approximately 85 million in this group between the age of 18 and 34. They are very different in many ways from the prior generations. They aren’t a revolutionary generation but they will produce radical evolutionary changes. For example, there are more women in Colleges and Universities than men for the first time in US History, women are earning 60% of the master’s degrees and they are on the way to domination in the workforce.
There is a new Gen-Y term, WINK’s, (Women with Income and No Kids, and typically no spouse or partner for that matter). Imagine how that changes housing.
Generation Y values community highly. Their concept of community is different though. Community can be a meet up at a local Starbucks or online in a social networking group. They also value a healthy work/life balance. They work hard but not at the expense of time with family and friends. Being socially responsible is also very important to their life style and happiness.
This is the “greenest” generation yet. They are well aware that they are the last generation to grow up with an endless supply of cheap carbon-based fuels. When looking to purchase real estate they do want it to meet “green” standards, as long as the premium in price is modest and offset by energy savings. For example, Gen-Y is more likely than a baby boomer to accept solar panels on the front of their house if they save money and can sell electricity into the grid.
So what is this generation going to look for in housing?
Gen-Y has lost some confidence of prior generations that home ownership is a way to develop wealth. This has tempered their interest in buying their own home; some will be renters by necessity and others by choice.
Because of their sense of community and balancing work/life they want to live in urban areas, a 2013 survey by RCLCO (Robert Charles Lesser & Co) found that 31% of Echo Boomers (Gen X and Gen Y) wanted to live in an urban core. They want to be close to each other (community), to services, work and they feel better about walking, riding bikes or using public transit to get around.
As they form households (which they are doing later than prior generations), they will look for that starter home that is well designed, simple and built to green energy standards. They may move to the older, less expensive suburbs that are close to the city centers and have been rehabbed to their standards or compact suburban town centers.
So, who will be taking over those big houses in the suburbs? It might very well be the next demographic we are going to look at, Immigrants. It is estimated that there are 40 million foreign born people living in the US – both legally and illegally. That’s 13 percent of our total population. But that’s not the extent of their impact on the US population; it’s far greater when you consider their children and grandchildren that are born here.
It’s estimated that 117 million new immigrants will be added to the population in the next 45 years. 57 percent will be immigrants themselves and the remaining 43 percent will be those born to immigrants during that period.
So what are the immigrants looking for in housing? Because of national norms they are more likely to live multi-generational in one household and also cluster together. For this reason they can afford houses in the suburbs and these larger homes fit their lifestyles.
The HarvardJointCenter projects that: “married couples without children (including empty-nesters) will be the fastest-growing household type, followed closely by single person households. While the number of married couples with children will fall by nearly a million among whites, it will increase by more that a million among Asians and Hispanics.”
With that said, it is projected that 1.25 to 1.4 million new households will be formed annually in the coming decade.
As investors in REIT’s, SFR’s (single family residences), multi unit buildings or home builder stocks I hope this information will help you better identify where the opportunities and future of Real Estate are.