A good article that examines how baby boomers and millennials are competing for their housing needs – read the last two paragraphs below:
In South Carolina, baby boomers elbowed out entry-level buyers to snap up single-story floor plans at Riverwalk, a bike-friendly, outdoor-oriented community with recreation and office space on the Catawba River in Rock Hill. Builder Evans Coghill had not foreseen that 55-plus buyers would provide such a boost to Riverwalk’s customer base, says chief marketing officer Alan Banks. “We thought it would all be families,” he says, but older buyers flocked to Riverwalk after seeing a newspaper ad for the downstairs-master ranch houses.
As a result, the Charlotte, N.C.–based firm will include more single-story homes and homes with master bedrooms downstairs in the community’s next phase, with subtle yet simple changes that appeal to boomers such as covered outdoor living spaces, walk-in showers, built-in shelving and storage (to hold a lifetime of treasures), and remote-access security.
A similar scenario occurred at Rancho Mission Viejo, a 23,000-acre community in California that eventually will include 14,000 homes and 17,000 acres of open space. When sales opened for the community’s first phase, developers were surprised to find their target audience (boomers) didn’t flock to its 55-plus communities. Following tradition for multigenerational developments, developers initially included three gated neighborhoods with age-restricted houses and amenities in the project.
But it turns out that the baby boomers and empty-nesters were just as—if not more—interested in the market-rate neighborhoods intended for young families. In Rancho Mission Viejo’s second village, Esencia, the 55-plus housing is integrated into all-ages neighborhoods, and gates are a thing of the past.
The public builders are taking note of this trend as well. Companies like D.R. Horton and LGI Homes have launched product lines (or, in LGI’s case, entire business models) around building no-frills homes for the first-time buyer. But when these developments open, the builders are finding out that it’s not just millennials who are scooping up the entry-level homes.
“When we launched Express in Florida, 40%, 45% were actually the people buying their last home, not their first home,” said Horton CEO David Auld on the builder’s second quarter 2016 earnings call. “And that’s something we’re taking note of, and making sure that we’re in a position to accommodate those buyers.”
Riverwalk and Rancho Mission Viejo are evidence of a trend that will change the way communities are built and marketed for years, and likely decades, to come. It happened at NorthWest Crossing, a family-friendly traditional neighborhood development in Bend, Ore., where older buyers account for 60% percent of sales, and at Skylar at Playa Vista, contemporary single-story flats designed for young professionals in Los Angeles where more than half the residents in the first phase were 55 and older. Taking note, PulteGroup is building 1,900-square-foot townhouses with flexible three- to five-bedroom floor plans designed to appeal to both millennials and boomers in Minnesota
Boomers have been swiping the best of their kids’ culture in everything from fashion to technology since the millennials began coming of age. The Christian Science Monitor first noted this trend in a 2002 article (“parents and kids today dress alike, listen to the same music, and are good friends,”), and it’s become more intense as millennials have become adults.
For perhaps the first time ever, similarities between a parental generation and the generation it raised far outweigh differences. They mingle at concerts, over craft beers and cocktails, on bike paths and hiking trails. They’re all foodies. A 2015 Eventbrite survey found that boomers and millennials have surprisingly similar spending habits and attend the same live music events, according to an Elite Daily article, “The Fun Is Over: Music Festivals Are Being Invaded By Baby Boomers.” Festival promoters have taken note, and last year Billy Joel played Bonnaroo.
“Boomers are in the process of downsizing and getting rid of junk, and millennials don’t have junk,” he says. “Neither wants a big yard, but they both want a place for a dog.”
Millennials and boomers are more alike than different in everything from technology to ethics, according to a Synchrony Financial report, “Balancing Multi-Generational Retail Strategies.” Millennials are only moderately more likely to own digital devices, according to the report. They’re no more likely than boomers to shop at socially conscious or environmentally friendly retailers (67% of all generations say they would). Both generations are very comfortable with browsing, researching, and shopping online, but they respond differently to marketing messages. The ideal strategy for reaching both, the report states, “is one where the boomer population feels valued and delighted, while the millennial feels excited and interested.”
“Millennials like iPhones, Macs, riding their bikes,” says Manny Gonzalez, principal of KTGY, which designed Skylar at Playa Vista. “I’m 62. We’re finding that people my age like the same sorts of things. We’ve worked with computers, and we’re tech savvy. We may not go to the exact same restaurants as millennials, but we still go to the same downtown area. We still like being part of that whole buzz.”
Home builders have paid more attention to boomers because they’re better off financially, thanks largely to history. Boomers launched during a prosperous time for the middle class and compounded assets, while millennials launched (or didn’t) into the Great Recession with crippling student loan debt. Many boomers are fortunate to have home equity (if they didn’t lose it in the housing crisis), but they’re retiring into murky financial waters. Three-quarters of them plan to fund their retirements solely with Social Security, says John Mulville, vice president of the consulting group for Real Estate Economics. Pension plans are in trouble, and 401(k) retirement accounts are just as vulnerable to market corrections now as they were in 2008. Home equity could become many retirees’ only asset.
Mulville says this has already fueled a boomer migration in Southern California as empty nesters sell the coastal homes they raised kids in for $1 million or more and pick up new, lower-maintenance homes in Riverside or San Bernardino for a couple hundred thousand dollars.
“People haven’t sacked away the balances they need, and they’re being forced to extract the accumulated equity in their homes and put it in the bank for retirement,” he says. “It’s all very new, and it will really intensify in the next few years.”
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