WHO WILL BUY PROPERTIES IN 2015?
DEMOGRAPHIC FOCUS FOR U. S. REALTORS IN 2015: MILLENNIALS
As we are gearing up for the new year, it’s good to start with a focus, no matter the industry. Most of the planning should’ve been done already, but it’s never too late. In real estate, many realtors plan by targeting a number of transactions, sometimes backing into it based on the desired dollar amount at the end of the year. Some plan by budgeting advertising dollars, printing expenditures, assistants’ salaries and so on. Others do nothing; just coast along, living from deal to deal, hoping for the best.
One productive area of focus might be a demographic group that is primed to become a real estate-buying population in 2015: the post college millennials. Millennials are generally defined as those born between 1980 and 2000; i.e. post generation X, who were in turn preceded by the baby boomers. Why the millennials in 2015? Robert Guest of the Economist makes a convincing argument in his “Time to Fly the Nest” article in the magazine’s The World in 2015 issue, which focuses on why “young adults will finally leave home”.
The premise that millennias will become active real estate buyers in 2015 is logical as it is based on recent economic trends in the United States. Given the fairly severe recession and unemployment numbers hovering around 10%, college students tended to either stay in school longer or more often, upon graduating and not finding suitable jobs, or to save money, moved back home for lack of other options (not to mention huge college loans that needed to be repaid). In 2012, 36% of all millennials reportedly lived with their parents; the number for those between 18 and 24 was closer to 56% and nearly 50% of them were not in the labor force (as opposed to many more in that same age group that were able to find employment before the recession). Moreover, 25% fewer were married than those in the same age group prior to the economic downturn.
In effect, Guest argues, many of the millennials had put their lives “on hold” e.g. postponed getting married, settling down and having children, mostly due to understandable financial and practical constraints. Now, in 2015 that might change. The job market has already improved to a good extent and more businesses (particularly small businesses) have resumed hiring, whereby even college grads with relatively ‘loosy-goosy’ majors are now finding employment. Some who are already holding jobs are upgrading to higher salaries, creating lower-level openings. The housing market in the U.S has improved, but a) not everywhere and not to booming levels (we in Connecticut are a prime example) and b) properties are still at reasonable prices and supply is ample in most regions. Mortgage rates continue to be extremely favorable, particularly for first-time home buyers, aided by various federal and state government programs. More importantly perhaps, the millennials have “had it” with the home environment and are ready to move on (probably to the relief of their weary parents) i.e move out and get their own places. Now, in 2015, they just might be able to do that.
So, real estate professionals, question:
If we accept the pent-up-demand-among-millennials argument, how do we target this potential buying group? Social media, blogging, tweeting, first-time buyer seminars; all of the above?
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