Millennials delaying marriage and homeownership, but potential looms large for housing industry
January 2015 - NWREporter
Millennials - those born between 1980 and 2000 - present some great opportunities for real estate professionals, especially for those who are patient.
During a recent webinar, a demographer and consultant from John Burns Real Estate Consulting teamed up to discuss what the 92 million Gen Y members mean for the housing industry.
A comparison to previous generations illustrates several significant differences. For example, in 1967, among adults ages 25-29, more than two-thirds (68 percent) were married with children.
Today, among the same age group, only about one quarter (24 percent) are married with children. Not surprisingly, their homeownership rate is lower than generations that predate them.
Gen Y presents some great opportunities for the future, said Mollie Carmichael, one of the consultants with Burns Real Estate. The millennials will be getting married and having children - just at a delayed pace, she assured her audience.
In anticipation of filling a pent-up demand, the Burns firm conducts research to provide its clients with insight on consumer attitudes and values. That research yields valuable information for builders, developers and other industry professionals regarding consumer preferences for home designs and styles, as well as desired community attributes.
Its 2014 Consumer Insights survey drew more than 50,000 responses. Among the 100-plus questions, researchers segmented the 15 percent of millennials who are shopping for homes today by age groups. The majority (63 percent) of these future new home consumers are 30 years or older. One third are in the 25-to-30-year age group.
A look at lifestages shows 10 percent are single, 46 percent are young couples, and 40 percent are families. "Couples and family formation are a big deal for new housing," the speakers reminded the webinar participants.
By 2019, the Gen Y group should begin rivaling their parents in the home shopping world. Understanding what motivates them when buying a new home is important to serving their needs, the Burns consultants suggested.
Location and price top the list for both millennials and the population at large, with more than 90 percent naming these factors as their foremost considerations. Home design, safety and schools round out the list of top five motivators. Less important were energy savings (with 21 percent listing it), prestige (12 percent), and environmentally sensitive practices (6 percent).
Asked about their favorite styles, "modern traditional" topped the chart, followed by "style on a budget," "casual organic" and "modern."
In a departure from other generations, three-fourths of millennials want a big home (2,000 to 3,000 square feet). Only 44 percent of all generations chose this option. By 2013, the average floor area was 2,200 square feet, up from 1500 in 1970 and 1,000 square feet in 1950.
The Gen Y group also expressed a much stronger than average preference for an outdoor play area for children, and for pets. Thirty percent stated a preference for a large open backyard -- twice the percentage of the national average.
While single and renting, the Gen Ys want to be close to entertainment, but the majority, like the national average, want suburban, either as part of a master plan or with a large lot in the 'burbs.
Asked about locational preferences, the highest percentage (55 percent) want inner suburban, followed by outer suburban at 38 percent. Only 16 percent chose the city's core, with "bedroom suburban community" being the least popular choice (5 percent).
A large majority, 84 percent, prefers a single family detached style, but, Carmichael emphasized, it comes down to affordability.
In summarizing the trends, the consultants from Burns emphasized trends differ by geography and price.