Millennials: Changing the Way We Do Business
Millennials, also known as the Millennial Generation or Generation Y, are changing the way we do business. Millennials were just one of the topics discussed at a recent breakfast seminar hosted by The Builders Association of the Twin Cities (BATC). The event featured Dr. Robert Dietz, Vice President for Tax and Market Analysis for the National Association of Home Builders (NAHB), who presented an analysis of local and national housing and economic results.
According to the United States (U.S.) Census Bureau, Millennials are the cohort of Americans born between 1980 and the mid- 2000s, and are the largest generation in the U.S., representing one-third of the total U.S. population in 2013. Dietz shared that, in today’s economy, most Millennials are holding off on making major life decisions such as getting married, having children, and buying a home due to the Great Recession. With the first wave of Millennials only in their early thirties and today's first-time homebuyer ranging in age from 33 to 34, this makes a huge impact on the residential housing market, according to Dietz. Zillow, the leading real estate and rental marketplace headquartered in Seattle, reports that the percentage of 24- to 33-year-olds who rent is on the rise, from 47% in 2008 to more than 51% in 2012. With the number of young adults wanting to rent, this is slowing down the housing market’s return which will have both a positive and negative impact on the future economy.
There are a number of reasons Millennials are staying out of the housing market; one being student loans. The average student loan debt is now over $25,000 compared to $15,000 ten years ago. Despite some reports, studies show that 90% are likely to purchase in the future. Statistics from NAHB show that 7% plan to remain renters, and 21% are currently preparing financially for home ownership. Many factors come into play for Millennials when choosing the right neighborhood. Dietz explained that 66% prefer to live in the suburbs, 24% rural, and 10% central city. As far as the community goes, Millennials prefer amenities nearby such as parks, walking/jogging trails, and playgrounds.
Looking ahead, the residential development industry must plan for the surge of young adults entering the home buying and building market. To put it in perspective, the Millennial population is projected to reach 75.3 million this year, surpassing the 74.9 million Baby Boomers and taking the rank as the nation’s largest living generation. It’s obvious that Millennials are changing the way we do business in our evolving and fast-paced economy. The residential market never sleeps.