Now that we are well into the second half of 2017, it’s time to reflect on trends that continue to take shape in the housing market. While the economy is showing signs of improvement, competition is fierce and supply remains tight.
There has been a movement toward minimalist, tiny house living. However, some contradictory trends are emerging that indicate downsizing has fallen out of favor as the demand for larger homes grows across various age groups. Housing preferences of both millennials and baby boomers have shifted in some unexpected ways that are impacting the market.
Baby Boomer Housing Choices
A recent article on CNBC indicates that more baby boomers (born between 1946 and 1964) are deciding to stay put, rather than downsize as they prepare for an empty nest and retirement lifestyle. According to Trulia, baby boomers currently own about 3.6 million unoccupied rooms, which is possibly impacting housing supplies across the nation. Younger buyers who are ready to upsize from their starter home are finding inventory particularly tight.
The article explains, that according to a recent survey by Freddie Mac, a majority of boomers surveyed said they intend to age in place. “That has contributed to the boom in home remodeling, but it continues to shrink the supply of homes for sale which is at a record low nationwide. Homebuilders are increasing production only very slowly, due to high costs of land, labor and material. Those costs have pushed the price of a newly built home to its highest on record. While builders are focusing more on the active adult brand, they need to keep those prices low and therefore cannot build in the urban areas most baby boomers prefer.”
Millennial Housing Preferences
Despite the recent tiny home phenomenon, it seems millennials also prefer more space as they look to upsize from cramped rentals into their first real home. In a recent study by Scripps Networks, owner of HGTV, 56 percent of millennials said that having a large home is important to them. The research was further discussed in an article on Today.com that also referenced Census data showing that “the median square footage of new homes is up 20 percent since the year 2000, from about 2,000 square feet to about 2,500 square feet.” The economy has shown signs of improvement over the past few years, encouraging millennials to purchase larger homes. However, limited availability has driven home prices to record highs, forcing many prospective buyers to delay their purchase.
While more Americans seem to prefer a little extra space, affordability will always be a factor. It’s part of what’s keeping baby boomers in place longer and will certainly drive millennial decision making. Is the desire for more space strong enough to delay millennials from entering the market to hold out for a larger home? Or, will the desire for more breathing room prompt a quicker move to a modest starter home that still offers a space upgrade? Only time and affordability will tell, and we’ll keep our eye on the trends as they emerge – and shift!