A recent report from the Urban Land Institute, based on research by John McIlwain, a senior resident fellow, cites trends in consumer behavior which he believes will drive the housing recovery. However, the drive will be in a slightly different direction than we’ve seen in the past.
The report highlights 4 major demographic waves that will change home ownership in the next decade:
1. Aging Baby Boomers (ages 55 to 64) - Many will forego retirement out of neccessity or choice. Those who will be able to move will choose active mixed-age living environments rather than the traditional retirement locations.
2. Younger baby boomers (ages 46 to 54) - This group will face a tough time selling suburban homes, keeping them from the traditional “move-up” in their prime earning years. Because of lack of equity, the 2nd home market will suffer.
3. Generation Y - This group numbers about 86 million, greater than the baby boomers. These folks place a higher value on community, on places to gather to share ideas, and are far less interested in homeownership than the previous generation. Whether skepticism of the market, or lack of ability, this group will rent for more years than their parents. They are interested in walkable, close-in communities rather than suburbs, and will choose green, energy efficient homes over other types.
4. Immigrants - About 40 million, both legal and illegal. They tend towards multi-generational households, preferring larger homes if they could afford them, in neighborhoods with a strong sense of community.
Mr. McIlwain concludes that “The suburban century is over. This is the urban century.”
Read the entire report.
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