Following the Population
Following the population is not only important to homebuilders, but is also invaluable to our nation as our diverse generations impact every part of the world from lifestyle to economic trends.
According to the U.S. Census Bureau, the number of children born each year has increased sharply more than two decades from around the 1980s. Today, we (homebuilders) are watching the 78 million Baby Boomers (born 1946 to 1964) and the 81 million “Echo Boomers” or Generation Y or Millennials (born from 1982 to 2001).
Why is it so important to watch these two generations when it comes to homebuilding?
This year, the Baby Boomers’ age range is between 46 to 65, which means this generation is in the pre-retirement stage or empty nesting, which is why they are looking for active adult communities. This is a time in their lives where they are ready to downsize but still want to have fun and travel. Most likely, they will sell their large home and purchase a smaller home located within walking distance to parks, restaurants, shopping centers, and cultural and community services. Or these Baby Boomers may purchase a vacation home or a “test” retirement home located in key areas that tailor to retirees.
In the same way that the Baby Boomers dominated the national landscape, the Echo Boomers are going to make news for years to come. In terms of home purchasing, this generation is just now starting to buy their first home.
These young professionals desire a social, urban lifestyle and are willing to give up prized home features to live closer to work and other amenities. According to the research firm RCLCO, two-thirds of Echo Boomers respondents say living in a walkable community is important to them. More than half would trade lot size for proximity to shopping or work and a third will pay more for this walkability.
Due to the uncertain economy and our recently real estate crash, the Echo Boomer is slower to buy but as rents go up and tax returns remain high, this generation will become our first time homebuyer.
A recent RCLCO study indicates that Echo Boomers are more ethnically diverse than previous generations and welcome diversity in all aspect of their lives. For example, the study states that 73% of the population (from 2010 to 2020) will be non-white. This is important to homebuilders in terms of home design as this ethnic group has different cultural values. For example, this group is used to density and may want to be close to transportation services like a metro station. Also, it’s important to design a separate bedroom suite for extended stays and build larger models as purchasing a home becomes a family or group decision.
No matter which generation we are watching, we will be ready to offer the “perfect” first home or the “dream” retirement community.
By Michael M.