Ok so you may be thinking, what do demographics have to do with real estate? Well actually, a lot. Every generation has different personality characteristics, priorities and attitudes and these characteristics result in different goals, lifestyle choices and purchasing behaviors. While not everyone identifies with every generational trait, it’s still pretty telling of decisions the overall group will make. Housing choice is one of those decisions. Let’s look at the 3 generations who are making big housing decisions.
Baby Boomers (Ages 56-74)
Some are just becoming empty nesters while some are in retirement. With kids out of the house, they have the opportunity to start living life for themselves again. They want to downsize and move to communities that cater to their newfound freedom – more walkable neighborhoods with restaurants, shops and activities. Some no longer want the responsibility of home ownership and will use the equity in their homes to fund their retirement and new lifestyle.
I believe this means they will look to live closer to downtowns or active areas, where apartment buildings or other multi-unit housing options normally permeate the housing stock. Even if they are not moving into big cities because of the covid-trend toward suburbs, they still may look in the “downtowns” of smaller towns – a “surban” lifestyle.
Gen X (Ages 40-55)
A large portion has been renting in recent years rather than buying. The main reason being many lost their homes to foreclosure or missed out on the opportunity to buy due to the crash of 07. Even though the housing market has been increasing, even booming in some areas, they are scarred from their previous experience, or from watching others go through such turmoil.
Although some will take the leap and buy, I believe a good portion will see ownership as too risky and will continue to rent.
Millennials (Ages 24-39)
This generation highly values experiences and the freedom to live life when and how they want to. They take pride in their independence and for that reason are drawn toward income sources that are non-dependent on location such as entrepreneurship, e-commerce and the remote work possibilities made more practical because of the pandemic. Committing to one job or one location for 30+ years is not enticing, so purchasing a home is not an easy, ‘automatic’ decision. Just like Uber offers mobility without the hassle of car ownership, renting is a lifestyle choice that offers mobility to explore and pursue opportunities.
All that being said, each group has different reasons for choosing where to live, but there has been a shift throughout each generation toward renting as a lifestyle and not as the ‘step-child’ option to home ownership. People will always need a place to live, but this shift toward the renter lifestyle is great for multifamily housing providers.
What are your thoughts on this trend?
Do you think there are still societal pressures at play to make people consider home ownership the “American Dream?”