Gen Y or Millennials are coming of age. As the largest demographic group, these 20 and early 30-something-year-olds are finally ready to make their mark. Armed with mobile devices and from the experience of living through a recession, their young, yet vocal opinions are already changing the real estate market. Here’s how their choices will impact the next five years.
Pounding the Pavement
Finally, Millennials are moving out of their parents’ houses and into urban areas. Philadelphia has seen the largest population growth of Millennials. According to the Center City District, 18-to-34-year-olds now make up more than 40 percent of the Greater Center City population. It’s easy to see why 20-something-year-olds favor Philly – it offers quick access to everything. This need for instant gratification, many analysts believe, will be the death of the suburbs and that this generation will never return to the cul-de-sacs of their teenage years. But if the patterns of the oldest part of this generation show anything, it’s that the predicted “urban shift” may not happen. Like the generations before them, Millennials will eventually trade roommates for spouses and begin families. Marriage and children are the two biggest drivers for first time home buying. What’s different from previous generations are the factors of when and where Millennials will buy.
Money, Location, Money
Affordability is the biggest influencer in real estate choices. Since this generation, more so than any other, is still saddled with school loans and earns 30% less income than the national average, they’re slow to make real estate decisions. The most popular option for this generation, aside from living at home, is to rent. But from a real estate and an economy standpoint, the more renters there are, the higher the rent – and it’s no longer the most economical option. It could explain why the National Association of Realtors predicts that over the next five years there’ll be 1.6 trillion dollars in home purchases. However, it’s not “McMansions” and white picket fences that appeal to this generation- it’s about replicating the conveniences of the city. Being able to eat, live, and work in the same place is crucial for suburban survival.
By 2020, Millennials will make up an estimated 50% of the workforce, according to a study by PwC. Corporations, office space landlords, and recruiters are keenly aware that this number will strongly change the way business is done over the next ten years. Despite being constantly connected to some sort of mobile device, this generation values socialization in the workplace. Employers eager to recruit Millennials are rethinking everything from where to locate their office space to what amenities to offer. Environmentally friendly properties situated near housing and public transportation are a must. As many employers are learning, it’s critical to make the office more appealing than working from home. As the residential real estate choice changes, so will the commercial market – responding to shifts in the workforce radius and lifestyle/workstyle demands of the next generation of employees.
Flexibility is the key to making this generation happy – no more nine-to-five routines or sitting in front of a monitor. Millennials are taking over.