A recent report by the Urban Land Institute cites four demographic trends which will impact housing in a significant way:
1. Aging Baby Boomers (55 to 64 year olds) given the losses in their net worth, many will be compelled to continue to work and to remain in their suburban homes until real estate values recover. Those with the ability to move will choose mixed-age living environments to fit their lifestyles.
2. Younger Baby Boomers (46 to 54 year olds) who currently are entering their prime earning years will lack home equity and as result will not be able to purchase second homes, as the older baby boomers may have been able. Consequently, the second-home market will experience a decline in demand as we move forward.
3. Generation Y (younger than 45 year olds) with 86 million members, they are not as interested in home ownership as their predecessors, rather they will more likely be renters by necessity or by choice. Demand for rental units is anticipated for years ahead.
4. Immigrants (legal and illegal) with 40 million members prefer “multi-generational households.” Provided they can afford it, they will likely choose to live in larger homes in areas with strong communities.
Evaluating the demographics of the location in which to invest is critical to a successful real estate investment.
[Data Source: Realtor.org, January 29, 2010]
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Interesting blog. Yes, the “younger baby boomers” are a crucial segment to grasp in understanding housing trends. Fortunately, we are learning more and more about them now that they have a name (Generation Jones) and identity which is receiving so much national atttention. Google “Generation Jones”, and you’ll see it’s gotten a ton of media attention, and many top commentators from many top publications and networks (Washington Post, Time magazine, NBC, Newsweek, ABC, etc.) now specifically use this term. In fact, the Associated Press’ annual Trend Report chose the Rise of Generation Jones as the #1 trend of 2009. Here’s a page with a good overview of recent media interest in GenJones: http://generationjones.com/2009latest.html
It is important to distinguish between the post-WWII demographic boom in births vs. the cultural generations born during that era. Generations are a function of the common formative experiences of its members, not the fertility rates of its parents. Many experts now believe it breaks down more or less this way:
DEMOGRAPHIC boom in babies: 1946-1964
Baby Boom GENERATION: 1942-1953
Generation Jones: 1954-1965
Generation X: 1966-1978
Sophisticated players in the housing industry will make serious bucks by learning about the key differences in consumer and real estate purchasing behavior among Jonesers which differs from its surrounding generations.
Excellent contribution! Agreed. Generation Jones with its political influence in the electorate, numerous leaders in government and in their prime earning years, is definitively a segment of the population that merits discerning attention. Moreover, housing needs and investment criteria will likely be driven more by objective factors, tempered emotions, keener analysis and realistic goals.