Real estate preferences more 'traditional' than expected
For so long, everything in housing has been Baby Boom, Baby Boom, Baby Boom. There are so many of them -- about 76 million, born between 1946-64 -- and their spending habits so influential that for years they've driven the decision-making process at all levels of the housing world.
The successor demographic, dubbed Generation X, has started to be heard. But a California real estate consulting firm is looking further down the road, and charting the housing preferences of Generation Y, sometimes called the Echo Boomers or Millennials.
They're going to be influential -- though maybe for what they're not going to do rather than what they will do, according to Tim Cornwell, a researcher for the Concord Group, a housing consultancy in San Francisco that in the past year has been studying their housing attitudes.
"Our generation has been raised in a world where they're told every single day they can have everything they want," he said of Generation Y, of which he is a member, having been born in 1980. The reality of today's economy may make that mindset a little tricky for them, he said.
Five things to know about Gen Y and housing:
1. Demographers differ on when members of Generation Y started to be born, though one often-cited bracket for the age group is 1977 through 1989, years that slightly overlap with Generation X, which analysts generally say were born 1965 through 1980. Generally speaking, the 60 million or so Americans in the Y group are now in their 20s, and Cornwell said they haven't been studied much yet.
2. Where baby boomers and Gen X started to make themselves known in the real estate market in their 20s, Generation Y will be taking its time, for a couple of reasons, Cornwell said.
For one thing, they're postponers. "They graduate from college and use graduate school to postpone adulthood or they travel" for an extended period after school, he said. These decisions limit their earnings and any savings that might otherwise go into homebuying, he said.
And then there's the economy.
"The economic picture for Generation Y is depressingly ugly," he said. In his company's research, 40 percent said they're still getting significant financial help from their families.
Thus, they're not likely to begin buying real estate in significant numbers until they hit the age of 35, he said.
"For most people in their mid-to-late 20s, (homebuying) isn't even in the conversation," Cornwell said. "Most of us can't afford to buy our parents' houses. Either our preferences have to change or density issues will come up."
3. Cornwell said Gen Y has a "mobile mindset," where lifestyle is everything.
"Used to be, you picked a job and you moved to the city where that job was," Cornwell said. But this group values locale and amenities first, and may be inclined to move to try out different
places and will look to wedge in their jobs and careers accordingly.
That transience could affect neighborhood turnover rates and possibly mortgage terms, he said.
4. Their affinity for neighborhood amenities means that their real estate purchases, when they happen, probably will be in so-called "inner ring" suburbs, near-in to larger cities, Cornwell said, though there's a difference of opinion within the research that's been done so far.
"Everybody in the industry likes to say that Gen Y will look to homes that are more urban and attached," such as townhouses and condominiums, he said. "That they'll look for (places that offer some benefits of urban living, proximity to transit and culture).
"But I think we're more traditional than people give us credit for, that we will look to single-family homes in the first-ring suburbs," he said. Those Gen Yers, once they hit 35 or thereabouts, will be having babies and will want to reconcile "urban amenities" with schools and safety, and the first-ring towns often offer enough of the urban lifestyle to satisfy the need, he said.
This desire doesn't bode particularly well for the distant suburbs that sprang up during the housing boom, he said. Gen Y doesn't want to spend that much time commuting, he said.
5. What do they want in a house? There's a stated preference for open floor plans, Cornwell said.
In Concord Group research, the younger Gen Y respondents (20-24) were less interested in a larger home size the next time they moved. They want a big kitchen (though they're inclined to eat out), and a garage and some yard space.
They have little interest in a formal dining room or a media or game room.
About one-fourth of all the Gen Y people surveyed said they'd pay 5 percent to 10 percent extra to live a 10-minute walk or bike ride (or short car trip) to get to work or retail services.
Mary Umberger Inman News July 6, 2010