Toby Parks REALTOR Coldwell Banker Residential Brokerage520-310-0122
Millennials and Boomers Are Changing the Real Estate Market
Despite
moving into different life stages, the two generations converge on similar
homes in defiance of generational stereotypes.
Photo: Courtesy Brown Harris Stevens
When Bobby West, a real estate agent with Coldwell Banker Real
Estate Services, recently held open houses in Pittsburgh, he noticed a trend:
both millennials and baby boomers flocked to the properties, attracted by the
square footage and price. While he found that millennials searched for a home
to turn into a family nest, baby boomers looked for a place to downsize. These
two dynamics are starting to play out at both the low- and high-end of the real
estate market.
Millennials (commonly defined as those currently between the ages
of 22 and 37) used to prefer urban apartment living, while baby boomers (those
born in the mid-20th century) owned sprawling suburban edifices. While many may
still do, preferences are steadily shifting.
“I think it has a lot to do with the natural cycle of life,” says
Santiago Arana, a Los Angeles-based real estate agent with the
Agency. Millennial households spiked to 28 million in 2016, a steeper
increase than any other age group, according to the Pew Research
Center. In the same year, over one million millennial women become
first-time mothers, and over half of their peers ranked “being a good parent” a
top priority.
“The moment they start having children and family needs, they want
to go to more residential, family-oriented areas,” says Arana.
The majority of millennials expect to purchase a home in the next
five years, Nationwide Mortgages, an online
mortgage aggregate, reported. Over half of 20- and 30-something home
seekers are in the market for the first time.
Los Angeles estate Photo: Courtesy of Coldwell Banker
Baby boomers, on the other hand, occupy the opposite gradient of
life’s trajectory, where retirement creeps in and children move out. Currently,
boomers own nearly $13 trillion of U.S. real estate—or two out of every five
homes in the country, according to a Fannie Mae report. The
authors, however, predict a swooping exodus due to the pull of rentals and
senior facilities.
While buying smaller properties may sustain the high rate of baby
boomers’ home ownership, the altogether departure from it might already be
underway. U.S. Census information from 2016 indicates that baby boomers are the
fastest growing segment of renters. Data from the
Integrated Public Microdata Series – Current Population Survey (IPUMS – CPS)
shows that baby boomers’ homeownership has slumped in 34 of the nation’s 50 top
markets from 2010 to 2017. Cities like Denver, Tampa, Memphis, and Pittsburgh
are seeing decreases. West, the agent from Pittsburgh, can attest.
“Pittsburgh has a really nice stock of condos, and the baby
boomers that I have been working with most recently owned a large home, where
they have raised their family,” he says. “All the kids have moved to college
and graduated and it’s time to downsize, and they are looking at condos in the
North Oakland neighborhood.”
Conversations with realtors across the country reveal that
in-demand features stay consistent regardless of the location. Whether in New
York City or Los Angeles, millennials lean toward modern,
open-floor concepts with a vibe of informality—either ingrained in the design
or quickly attained.
“Someone said to me last week that they are turning the dining
room into a playroom, because they were not at the stage where they would ever
have people over or use the dining room,” says Danielle Wiedemann, a realtor
with Sotheby’s International Realty in New York, of a millennial client.
Some millennials are transforming dining rooms into separate
spaces to meet their needs. Photo Credit: Jacob Elliott Photography
While they may be eager to slightly tweak a home to match their
taste, millennials are shying away from overwhelming renovation projects. They
prefer new-construction, move-in residences, says David Parnes, a celebrity
realtor starring in Million Dollar Listing Los Angeles. Reasons
given for this preference include working long hours (millennial tech
entrepreneurs power the Los Angles market, Parnes says) to having young
children to even, in some cases, the 21st-century desire for instant satisfaction.
“I think that in the age of HGTV, as fun as it is to watch other
people tear a house apart, it is eye-opening to realize that there is a lot
more work than meets the eye,” says West. “So a lot of young folks that I work
with are very conscious of what needs to be done and what is already done.”
Even though baby boomers may not mind a revamp as much as
millennials do, they also seem attracted to recently built abodes. In that way,
the market is converging, says Frank D. Isoldi, a real estate agent affiliated
with Coldwell Banker Residential Brokerage in New Jersey. “They are trending
toward the new(er), not the megamansion any longer, and they want super
convenient locations,” Isoldi says.
Baby boomers often look for a walkable lifestyle and entertainment
options. Many are ready to revive old pursuits now that their children have
flown the coop, and that often includes frequent and hassle-free visits to
restaurants, museums, shops, and theatres. Manhattan is a case in point.
Wiedemann says that many baby boomers are drawn to the neighborhood because
it’s convenient and easy—and because they can ditch the car.
But well-to-do baby boomers are not just craving a New York state
of mind. They want homes with character, like proximity to and views of Central
Park or a townhouse with a hidden back garden. “Baby boomers mostly look for
something special that would make them feel like that it is okay that they got
rid of their large house,” says Wiedemann, adding that many move to high-end
rentals with one-of-a-kind traits.
Solarium Penthouse at 555 West End Avenue Photo Credit: Hayes
Davidson
On the West Coast, baby boomers are also reducing their
residential footprints—but without giving up home attributes like wine cellars,
secluded master suites, and several additional bedrooms. They may be empty
nesters, but “they want the kids and grandkids to come visit, so they want to
make sure that they have enough space,” says Ricardo Santa Cruz, president and
CEO of RSC.
Santa Cruz kept family reunions in mind when working on Mandarina, a Mexico-based,
One&Only-branded resort and residential community. The development appears
to present a case study for how to advertise to both generations. It speaks to
baby boomers who want a memorable and easily accessible destination to gather
with their offspring—and it offers amenities that cater to millennials. A
second home may not be on the radar for most millennials, but, Santa Cruz says,
a focus on travel and unique pastimes tugs at some.
“When they hear about a development like ours, they go, ‘Wait a
minute, there is no golf,’” he says. “Instead of golf, you have horseback
riding and a kids’ farm and zip-lining. Suddenly, all of these different
activities that break the traditional mold really draw their attention.”
Nonetheless, marketing to millennials—who are known for doing
extensive research online before visiting a property—is no easy task. They are
more erudite and prepared, says Todd Peter, agent with Sotheby’s International
Realty in Palm Beach, Fla. “Our job [as realtors] is to add further value about
each neighborhood by having local knowledge and off-market properties—things
they cannot see by going online,” he says.
Developers and sales agents of projects like Mandarina have a
higher bar to surmount—anticipating the zeitgeist yet to dawn. Millennials and
baby boomers, which together comprise a vast portion of real estate clients,
dictate the industry, but their changing lifestyles make it hard to predict
what will appeal to them in two or three years. And a new condominium may take
even longer than that to come to the market. “Developers tend to try to stay
with what has been tried and proven in the past,” says Santa Cruz. “These
developments take years to come online, so a lot of times, once they come
online, they realize ‘We totally missed the trend.’”
Though it can be hard to gauge the ever-changing real estate
market, developers and agents alike remain committed to building and showing
properties that appeal to both millennials and baby boomers. Increasingly,
those properties are one and the same.
