Prediction: Boomers Stay Put, Gen Y Keeps Renting
Over the next decade, the housing landscape looks ominous compared to the boom of the early 2000s, according to a new study from the Urban Land Institute. The prediction is that home ownership in the U.S. -- off a high of 69 percent in recent years-- will drop to 62 percent and home appreciation will lag at about one to two percent annually.
Four demographic trends, says the report, revolving around older baby boomers, younger baby boomers, Generation Y and immigrants, will be shifting the demands on the housing sector.
Older Baby Boomers
Older baby boomers, defined as 55-64 years old, who have seen their 401K or savings accounts depleted or their financial situation change, may be forced to keep working past retirement. This fiscal instability will also mean that this age group will likely stay in their current homes until values recover. Those secure enough to move, however, will forgo the traditional choice of retirement homes and instead settle in active, mixed-aged communities.
Younger Baby Boomers
Plagued with shrinking home equity and flatlining incomes, younger baby boomers will struggle to get rid of their suburban homes. For this 46-54 age subset, attaining a second "retirement" home poses an increasing challenge and will possibly derail the future of a second-home market. At the point when this age group can get rid of their property, they'll opt for a neighborhood made up of compact, conjoined living units.
Out of recessionary restraints and new ideals, the technology-raised Gen Yers will divert from their parent's steadfast dreams of owning a home and continue to rent for the foreseeable future. In their eyes, a community is a place to share information, ideas and opinions -- not just with neighbors, but also online. The 86 million Americans who fall into this demographic will likely chose walkable, tightly-knit designed communities, but the issue of cost may force them to more isolated areas. This earth-conscious group will also be drawn to green, alternatively-powered homes.
In the next 10 years, the 40 million population of immigrants in the U.S. is only expected to grow.
And the way in which immigrants settle will create different demands on the housing industry. The immigrant population typically settles together, especially as additional relatives migrate, and multi-generational households are common. With housing, this group desires a sense of community and the ability to be close.
Throw out those vacation house leaflets and mow the lawn. Or pull out those rental brochures and packing boxes. Once again, the cultural divide between the baby boomers and Generation Y widens a bit more.