As the phrase "OK Boomer" proliferates it has me thinking about some of the housing trends unfolding while the generation born between 1946 and 1964 ages, retires, and transitions to the next phase of life.
A Wall Street Journal article pointed to The Boomer Bubble a 21-million-home contingent of seniors will pass away or migrate to assisted living facilities over the next two decades . Many of these homes are in locations considered undesirable by the future generations - mainly all-inclusive retirement communities in Florida, Arizona, and Nevada. Gen Xers and Millennials have shown they would rather be in cities or suburbs of major metropolitan areas with shops and restaurants within walking distance (so far). So the expectation is there will eventually be lower pricing due to less demand in these peripheral locations. I take this as a cue that urban cores like New York City, Seattle, and San Francisco will continue to thrive based on generational preference.
Another housing trend is that elaborate suburban McMansions built by Boomers are selling at steep discounts - they're expensive to maintain and out of touch with today's design trends. Tastes have shifted dramatically in just the last decade with Millennials preferring minimalist and low maintenance design. Speaking broadly an extra trip each year is of greater meaning to this generation than additional square footage in a home that errs towards excess.
To Generation Z and even some Millennials snidely telling the older generations "Ok boomer" I'd caution them not to bite the hand that feeds them! According to Business Insider it's estimated that $68 trillion will be passed down from boomers within the next few decades during the "Great Wealth Transfer." It will be the greatest in human history and by 2030 millennials will hold five times as much wealth as they do today. The concentration of a lot of this money along The Coasts along with limited supply will help alleviate the abundance of homes for sale in pockets like my very own Upper East Side.
One counterbalance to these trends is that there is a portion of the population that is expected to live longer and benefit from improvements in science and technology. "Aging-in-place" technologies are already allowing people to enter senior housing at a later age while health improves and this is more prevalent in wealthy neighborhoods. Entrance to these facilities averages 84-85 today compared with 82 a decade ago, according to analyst Lukas Hartwich (Wall Street Journal). As a result some companies that specialize in the development of senior housing are performing below expectations. From a multi-generational perspective this would mean reduced supply of residential housing as the elderly can remain in their homes for longer with more comfort than previous generations.
Demographics play a tremendous role in the demand for housing and real estate pricing so these are intriguing areas of data I'll be paying attention to. Please feel free to reach out anytime if you'd like to discuss or you're in search for your place in the world.
xo,
Corey
