18 Apr Generation Y causing large shift in housing cycle
The housing cycle is entering a big shift in North America’s key cities as the Millennials/Generation Y/Echo Boomers move into home ownership.
The values of this generation reflect the era they were raised in. Born between the early 80’s and 2000’s, many millennials have remained at home longer than the baby boomers due to rising rental costs and sizeable student loans. Instead of moving out after finishing high school they often live at home while going to college or move back after graduation to save their money.
Their first home purchase will likely be a condo, but researcher Don R. Campbell predicts that the one-bedroom apartment or townhouse will be a hard sell in 10 years.
“These will be the ghettos 10 years down the road. No-one will want them. Even when they buy, they’ll want two bedrooms to share costs with friends or tenants. Even three bedrooms to have one for an office,” says Campbell.
Campbell’s comments resonate with Price Waterhouse Coopers’ survey – Emerging Trends in Real Estate.
An excerpt from the report states the importance of this demographic:
“The growth of Generation Y and its impact on all sectors of commercial real estate could be the singular most dominant trend for many years,” says the report. “This group lives, works and plays in different ways than previous generations. The impact will be felt by all real estate sectors. This generation will be more urban and less suburban; they won’t want to drive as much but will want to be mobile. From in-town rental housing to collaborative office space, to close-in warehousing to ensure same-day delivery from online retailers, Gen Y will be a noticeable force shaping commercial real estate. All of these trends will have significant impact on real estate. Referred to as a ‘powerful engine’ by one investor, this generation will be ‘very good for real estate.’”