What’s the Key Age Demographic for Real Estate in This Decade?

January 29, 2010 by Brian Summerfield · 4 Comments
Filed under: Marketing & Prospecting, Selling

By Brian Summerfield, Online Editor, REALTOR® Magazine

A recent report from the Urban Land Institute outlines a few important demographic groups in real estate going into the new decade. (The Teens? The Tens? Are we going to have another debate about decade labels after we failed to definitively resolve the last one?) 

Anyway, according to ULI, the following three generational groups will shape the fortunes of the housing market over the next 10 years:

1. Aging baby boomers (ages 55 to 64 years old): They will keep working, and many will be forced to stay in their suburban homes until values recover. Those who are able to move will choose mixed-age living environments that cater to active lifestyles. Walkable suburban town centers also will appeal to this group.

2. Younger baby boomers (46 to 54 years old): They are now entering their prime earning years but they will lack home equity and unlike the older members of their generation, they won’t be able to purchase second homes. This will likely curb the prospects for the second-home market.

3. Generation Y: They are larger than the baby boom generation (with a population of about 86 million). As they enter the housing market, they are less interested in homeownership than their parents were when they were young adults. “They will be renters by necessity or choice for years ahead,” says John K. McIlwain, author of the report.

(Note: The fourth demographic was not broken out by age, but rather by country of origin. ULI says the approximately 40 million legal and illegal immigrants will also factor into the fortunes of real estate in a big way.)

When reviewing ULI’s generational list, one major question comes to mind: Where are the buyers going to come from? If the characterizations above prove accurate, then many of the boomers are going to remain fairly stationary due to financial and employment insecurities, while members of Generation Y, the oldest of whom are now in their twenties, won’t be interested in the commitments involved with homeownership due to their age and income.

The answer may lie in a group ULI left off the list: the Gen Xers. This group, which numbers somewhere between 40-50 million, will be entering their peak earning years during this decade. Also, as they’re currently between their early thirties and mid forties, many of them are just beginning to consider homeownership—undoubtedly due in part to the fact that many of them have just started or will soon start families.

Sure, there will be some Generation Y and boomer buyers in the mix during the next decade, and not all Generation Xers will be anxious to purchase homes. But I wouldn’t be surprised if Generation X plays a bigger role in housing than any of these other groups. Plan your marketing and sales strategies accordingly.

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Tags: baby boomers, demographics, Generation X, Generation Y, housing market, immigration, ULI