Boomers and Millennials - They Agree On At Least One Thing
Updated: Apr 4, 2019
Even though our home prices are primarily driven by our local economy and available inventory, we can’t ignore the impact of demographic changes that will be unfolding over the next decade. With Baby Boomers and Millennials representing 31% and 35% of homebuyers, respectively, they exert significant influence on real estate values. As Boomers retire and Millennials become homebuyers, their choices will dramatically alter the residential landscape.
Boomers bought real estate at a younger age, driving a massive increase in housing prices in the 70’s and 80’s. They moved to larger properties in the suburbs and hills, often leaning towards traditional styles with serene streets and generous square footage. Their homes appreciated so dramatically over the next few decades that many of those homeowners would be unable to afford that same house today. As they start to retire, many are choosing to cash out of their home equity, downsize and move closer to conveniences.
In contrast, Millennials are settling down later in life. Burdened with record levels of student loan debt and facing home prices that are out of reach, they have favored a more urban lifestyle in smaller and updated residences closer to work, conveniences and activities. With homeownership less of an option, they tend to spend a greater share of their income on day to day experiences. It is not surprising that when Millennials finally can afford to purchase a home, they seek contemporary floorplans in immaculate condition to avoid any additional cash outlay. They are often willing to sacrifice size for location to maintain their active lifestyle.
As a family with both generations in tow, I can tell you that predicting when and where my husband and I will retire and when my daughters will settle down is a fool’s errand. Yet, it seems consistent with the generational trends that our real estate tastes are converging. How this will play out in our market with new units coming near the city center and the limited housing stock of larger more expensive homes is unclear. In this first quarter of 2019, I continued to see updated homes with open floorplans close to coffee and shopping receiving the most activity and selling well over the list price. Conversely, the demand for larger traditional homes in the hills has been a bit more tepid, with those properties generally taking longer and selling at or near list price.
My best advice is that if you are thinking of selling your home in the next year or two, begin working with an agent early to help you set your expectations and prepare your home for today’s buyer. Our local economy remains strong and with the highly anticipated number of initial public offerings on the horizon, I expect demand for the right properties to remain competitive.