Millennials have the power to reshape RE market
ORLANDO, Fla. – Feb. 2, 2016 – There are a lot of millennials out there, said Dr. Elliot Eisenberg, a former senior economist with the National Association of Home Builders (NAHB) at the recent 2016 Florida Real Estate Trends during Florida Realtors® Mid-Winter Business Meetings. The millennial population (ages 25-34) now overshadows even the baby boomers.
According to Eisenberg, Generation X (ages 35-55) had fewer people in the first-time buyer market. But with the millennials now in their prime home buying years as the recession fades into the rearview mirror, housing demand could soon skyrocket. Most surveys find that the millennials have a desire to own a home with strong pent-up demand.
The only big question: When will they commit to the process and move out of their parents' homes?
At the recent NAHB conference in Las Vegas, economists predicted that the millennial generation would also have a significant impact on home designs, thanks to a strong preference for energy efficiency and smart home technology.
In 2015, about 15 percent of adults ages 25-34 lived with a parent – 3 percent more than the highest share between 1983 and 2007. That translates into 1.3 million people who normally "would be out there, forming their own households, demanding their own units" either as buyers or renters, said NAHB Assistant Vice President for Survey Research Rose Quint.
Quint said she once thought millennial demand would have increased by now, thanks to new mortgage programs and looser mortgage insurance requirements unveiled a year ago, but she was wrong, and the opposite has occurred so far with new homes. In 2015, the typical new single-family home grew to an average of 2,721 square feet, the highest ever, and the new-home market continues to be dominated by move-up buyers rather than first-timers.
"Before we see that expected pullback in square footage and price, we're going to have to see a significant return of the first-time buyer," who is more likely to buy a smaller home at a lower price point, Quint said.
"What's important about this generation is their comfort with technology," said Better Homes and Gardens Brand Executive Editor Jill Waage at the NAHB convention. "They are the first generation to walk into homeownership with a smartphone in their hands."
When it comes to product choices, millennials have "read the ratings, comments and reviews, and they know what's worth it," and have probably created a Google alert so they know when it's on sale, Waage said. "This generation is searching out ideas, following bloggers," and creating Pinterest boards with their preferences… They've already curated their dream home online, saving it on their boards so they can [be ready] when the day finally comes."© 2016 Florida Realtors®