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Residential
- Housing Market and The Millennials
Millennials (born between 1982 and 1996) are buying homes later than prior generations and deferring significant life events like marriage (20 percent of 18- to 29-year-olds were married in 2010, compared with 59 percent in 1960). Millennials will have a higher chance of buying a home (by 18 percentage points) as they marry. Millennials have more student loan debt and lower-paying occupations than prior generations at their age, which is one of the reasons for deferring significant life expenditures. According to a survey conducted by SoFi, 61% of Millennials have put off buying a home because of student loan debt.
In addition, according to a Freddie Mac report, 51 percent of young Millennial renters (ages 22-39) had to make a different housing decision due to student loans, compared to 38 percent of younger Millennials who buy a home. In addition, 41% of older Millennials (ages 30-38) who rent and 36% of those who own had the same problem.
Many Millennials are optimistic and wish to improve customer service. As a result, offering excellent customer service and having patience as this generation becomes homeowners will be critical for real estate brokers.
- Gen Z Appreciation
This generation, which was born between 1997 and 2010, now has an adult cohort. They are knowledgeable spenders who place a high value on prudent financial investments. They've seen their older Millennial friends and family members fall into a lot of debt, and they don't want to follow in their footsteps. Adults of Generation Z, ages 18 to 21, place a high value on making money and having a successful career. They are more concerned with a product's usability, long-term value, prudent investments, and innovation.
Because Gen Z is still in their formative years, luring them with the prospect of a long-term investment may be more appealing than simply cutting their monthly housing expenditures.
- Looking Ahead
The current market conditions are the starting point for our younger generations' home buying trends. Mortgages should become more tempting to younger homebuyers if the Federal Reserve continues to cut the Prime Interest Rate. Cheaper rates often mean lower monthly payments. However, because our financial markets are in a difficult position, this upward trend may be short-lived, with the gradually rising stock market poised for a correction.
Younger families would traditionally acquire a starting home and then sell it to upgrade to a larger home. Consumers who desire a great location to reside in a nice region adjacent to a commercial hub are usually bound by a price range. However, many consumers are downsizing because compact spaces are not only less expensive to purchase, but also have fewer maintenance and electricity expenditures. Younger generations have particular environmental stewardship standards, therefore small footprints appeal to them because of their low impact.
Home customization is becoming increasingly popular. The idea for younger people is to create a more personalized place that also appears ready to be shared on social media, from upgrading their patio to adding an in-law apartment for aging parents. "Fixer-uppers" are more appealing since they are authentic and have a history, but they may also be adapted to meet the demands of the homeowners. Younger generations are picking up on the do-it-yourself (DIY) movement, which they may have learned from their parents, who became DIYers after watching famous TV series.
Finally, commercial real estate specialists may be able to market vacant retail locations (malls) to these younger investors in search of fresh business prospects. Young homeowners are going to places outside their houses for pleasure and enjoyment as they choose smaller quarters to call their own. Many of the empty retail buildings are being converted into more immersive companies (e.g., laser tag, escape rooms, virtual reality lounges, etc.). This appears to open up company investing prospects for Millennials and Generation Z.
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