millennials/baby boomers, multifamily housing and ... · millennials/baby boomers, multifamily...

MILLENNIALS/BABY BOOMERS, MULTIFAMILY HOUSING AND SUSTAINABLE GROWTH STRATEGIES: WHICH WAY IS IT GOING?

June 1, 2015Selma Hepp, PhD, Senior Economist

DEMOGRAPHICS SET THE TABLE POPULATION AND ITS COMPOSITION DEFINE THE FUTURE

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

4,000,000

4,500,000

5,000,000

1909

1912

1915

1918

1921

1924

1927

1930

1933

1936

1939

1942

1945

1948

1951

1954

1957

1960

1963

1966

1969

1972

1975

1978

1981

1984

1987

1990

1993

1996

1999

2002

2005

2008

2011

US Live Births by Year and Generation

Boom X Y Z

Source: Realtor.com Analysis of US National Center for Health Statistics

MILLENNIALS IMPACT ON HOMEOWNERSHIP ONLY TO BEGIN

LENDING STANDARD DROVE 50% OF THE DECLINE BETWEEN 2001 AND 2012

…AND THEY ARE DELAYING ADULTHOOD

8/10 FEEL HOME OWNERSHIP IS IMPORTANT

How important is home ownership to you on a scale of one to 10, with one being not at all important and 10 being extremely important?

0%

5%

10%

15%

20%

25%

30%

1 - Not atall

Important

2 3 4 5 6 7 8 9 10 - VeryImportant

18-26 27-34 All

MOST EXPECT TO BUY A HOME WITHIN 5 YEARS

When do you expect to buy a home?

0%

5%

10%

15%

20%

25%

30%

35%

Within ayear

In 1-3years

In 3-5years

When Iget

married

When Ihave achild

Never Other Don'tknow

3%

23%

32%

17%

3% 2% 3%

17%

MANY YOUNGER MILLENNIALS EXPECT TO BUY WHEN THEY GET MARRIED

When do you expect to buy a home?

0%

5%

10%

15%

20%

25%

30%

In 1-3 years When I get married Don't know

19%

23%

13%

29%

9%

23%23%

17% 17%18-26

27-34

All

MILLENNIALS ARE ESPECIALLY ACTIVEAN ESTIMATED 2/3 OF SEARCHES IN JAN WERE MILLENNIALS

IMPEDIMENTS TO PURCHASEBIGGEST ISSUES ARE SUPPLY, TIME, AND DOWN PAYMENT

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

Have not yet found a house that meets my needs

Cannot find a good house in my budget range

Always overbid by other buyers

Just starting to explore

Haven't decided on a specific neighborhood/town

Need to improve credit score

Lack enough funds for down payment

I owe more on my current home than it is worth

Can't sell current home

Currently on a lease

What's Getting in the Way of Making a Home Purchase?Repeat First-Time All Buyers

Source: Realtor.com Survey of Buyer Traffic, January 2015

HOUSING AFFORDABILITY DOWNSHARPLY SINCE Q1 2012

California vs. U.S. – 1984-2014% OF HOUSEHOLDS THAT CAN BUY A MEDIAN-PRICED HOME

SERIES: Housing Affordability Index of Traditional BuyersSOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

0%

10%

20%

30%

40%

50%

60%

70%

80% CA USAnnual Quarterly

AFFORDABLE INVENTORY AVAILABLE TO MEDIAN-INCOME HOUSEHOLDS

SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

68.8%

29.8%

0.6%0%

10%

20%

30%

40%

50%

60%

70%

80%

2015 Q1

MILLENNIALS’ BIGGEST CONCERNS

What are your biggest concerns about home ownership?

0% 10% 20% 30% 40% 50%

Other

Security

Depreciation of the home value

Losing the home

Responsibility

Satisfaction with home/location

Maintenance/upkeep

Problems with credit, mortgages, taxes

Price/affordability

18-26 27-34 All

BIG LOTS IN THE SUBURBS ARE HIGHLY DESIRABLE

Which of the following features would you like to have in your ideal home?

0% 10% 20% 30% 40% 50%

Other

Don't know/ unsure

High rise building

Urban location

Live/ work space

View

Suburban location

Lots of land/ big lot

18-26

27-34

All

AFFORDABILITY TOPS CONCERNS

URBANITES = SUBURBANITES

• only 13 percent of the total sample lives in or near downtown areas

– represent 10.2 million young people who like living in the urban core

HOMEOWNERSHIP EXPECTATIONS• 70 percent expect to be

homeowners by 2020, only 26 percent own today

• Even among those who do not expect to own in five years, 92 percent believe they will eventually purchase homes

• 55 percent agree and 45 percent disagree homeownership is good long-term investment

• Only 11 percent have applied for a home mortgage, and were rejected and are therefore renters by default.

BABY BOOMERS STAYING PUT

MAJORITY DO NOT PLAN TO SELL HOME WHEN THEY RETIRE

Do you plan to sell your current home when you retire?

Yes, 10%

No, 59%

Don't know/ unsure, 32%

MAJORITY WON’T SELL BECAUSE THEY LIKE THEIR HOME

Why do you not plan to sell your current home when you retire?

78%

10%

8%5%

I like my home

I cannot afford to buy anotherretirement home

I plan to give the home to mychild(ren)

Another reason

PERCENT OF RETIREES WHO HAVE MOVED OR ANTICIPATE TO MOVE

36%

37%

27%do not anticipate movingin a retirement

have moved in retirement

have not yet moved, butanticipating moving

SERIES: Home in Retirement: More Freedom, New Choices StudySOURCE: Age Wave, Merrill Lynch

NEARLY ½ PLAN TO DOWNSIZE

What type of new home are you planning on purchasing?

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

Larger

Other

Same size, but in a different location

Don't know/ unsure

I do not plan to purchase another home

Detached single-family home

Townhouse/ condominium

Smaller

2%

4%

9%

11%

16%

22%

31%

47%

RETIREE‘S’ MOST RECENT MOVE WAS INTO A…

smaller home, 51%lager home, 30%

same sized home, 19%

SERIES: Home in Retirement: More Freedom, New Choices StudySOURCE: Age Wave, Merrill Lynch

MAIN MOTIVATIONS FOR UPSIZING

16%

19%

20%

33%

0% 5% 10% 15% 20% 25% 30% 35%

more room for friends to visit

more prestigious home

more room for additional familymembers to live with me

more room for family members to visit

SERIES: Home in Retirement: More Freedom, New Choices StudySOURCE: Age Wave, Merrill Lynch

TOP REASONS WHY RETIREES WOULDN’T LEAVE THEIR CURRENT HOME

28%

31%

42%

44%

48%

54%

0% 10% 20% 30% 40% 50% 60%

I can't afford to move

friends are close by

I love my community

I don't want to lose independence

Family is close by

I love my house

SERIES: Home in Retirement: More Freedom, New Choices StudySOURCE: Age Wave, Merrill Lynch

TOP PREFERENCE FOR RECEIVING CARE

own home, 85%

assisted living facility, 10%

family member home, 4%

nursing home, 1%

SERIES: Home in Retirement: More Freedom, New Choices StudySOURCE: Age Wave, Merrill Lynch

NUMBER OF NURSING HOME RESIDENTS

1,300

1,325

1,350

1,375

1,400

1,425

1,450

1,475

1,500

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

SERIES: Home in Retirement: More Freedom, New Choices StudySOURCE: Age Wave, Merrill Lynch, Centers for Medicare and Medicaid Services

NEARLY 1/2 PLAN TO MOVE OUT OF STATE

Where do you plan on moving when you retire? N = 45

2%

18%

18%

18%

44%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

Another Country

Norther CA

Other CA

Southern CA

Another State

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