You may think of tech-savvy Gen Y as contrarian, iPad-toting hipsters in search of super-green urban living, averse to all things suburban and unwalkable. Born between 1980 and the early 2000s, Gen Y looks poised to be the next big purchaser of homes and one that the homebuilding industry is eagerly anticipating. After all, they will quickly become the predominant generational group within the primary home buying age.
As a housing market researcher and member of Gen Y myself, I want to take a further look into what it will mean for community planners and builders. Surprisingly, we may not be that radical a departure from the norm.
Wait for ItWhile the 25+ portion of Gen Y will grow significantly over the next three years, their anticipated influence won’t come into play until 2020.
The home buying delay for this generation is a result of three things:
1. Student loan debt.With 40% of the 18-29 year old population with established credit saddled with student loan debt, homeownership is taking a back seat.
2. The Great Recession.The persistent downturn that began in 2008 hit just as Gen Yers were coming of age, delaying the establishment of their careers, and leaving many graduates struggling on the front lines of high unemployment, with 9.7% of those 20-34 unemployed compared to 6.2% amongst older age groups.
3. A cultural shift.For the above reasons along with other sociocultural influencers, Gen Y is putting off major life choices like marriage and starting a family. Compared to previous generations at comparable points, fewer members of Gen Y are married, and starting their own households is a more distant priority. This notable shift is exemplified in the chart below, which shows a nearly 10% decrease in the marriage rate of 20-34-year olds in just a six year span.
Anticipating Gen Y Homeownership remains part of the American Dream across all life stages according to our Consumer Insights survey.
What’s more, when the time comes, Gen Y will have more conventional preferences for homes than we expect. Though delayed, their goals are more similar to the previous generations’ than not. As they begin to enter their 30s and 40s, and eventually marry and start families, they will turn to the suburbs just as their parents did in search of affordable housing and more space. In contrast, urban housing options are often higher priced with monthly fees and smaller in size which will be challenging for these expanding households.
While Gen Y will have similar overall housing preferences to past generations, it is a group of design-centric consumers. They will expect more efficient and thoughtful floor plans marked by multi-functionality, technology integration, and the cross-pollination of indoor and outdoor spaces. You’ll have to wait for them, but they will eventually be the promised surge in the housing market. Plan accordingly.