Is it the perfect real estate storm? A survey released yesterday by PulteGroup Inc. finds strong demand soon from buyers 18 to 34. Meanwhile, Arthur C. Nelson, a professor of urban planning at the University of Utah, worries that the nation’s supply for for-sale inventory will expand fast as more baby boomers turn 65 and decide to rent or downsize.
According to the PulteGroup Home Index Survey (PGHI), 65 percent of renters age 18-34 with an income of more than $50,000 intend to buy, and that percentage grew in the past year.
Most millennials aren’t moving on their own, with 76 percent saying they’ll live with a spouse or significant other, according to the survey. Of those not moving in with a significant other, 22 percent expect to have a roommate, including a friend, parent, in-law, grandparent or sibling.
“Millennials have witnessed the housing boom and bust, but still believe homeownership is a good investment,” says Fred Ehle, vice president for PulteGroup. “Consistent with other third-party research that shows more than 90 percent of millennials plan to buy a home someday, we see a lot of young adults who are making financial sacrifices to afford a place of their own. With the combination of incredibly low mortgage rates, rising rental rates and very low inventory levels, millennials realize now is a good time to purchase a home.”
PulteGroup says 30 percent of its 2012 home sales went to first-time homebuyers, many of whom are millennials. In internal buyer surveys, more than 50 percent of millennials say a desire to own/build equity is the primary reason for purchasing a home. The second largest reason, at 12 percent, was that millennials were tired of apartment living.
“Millennials today want a lot of value in their home that makes efficient use of every space,” says Ehle. “In fact, the single most important home feature to a millennial buyer today is the floor plan layout.”
PulteGroup’s internal buyer surveys showed that millennials listed the following aspects in a new home as extremely important/very important:
• 84 percent – ample storage for daily items
• 76 percent – space for TV, movies, sports watching
• 73 percent – the entry to the home
• 69 percent – an open/layout space in kitchen and family rooms for entertaining
• 63 percent – outdoor living/deck
• 36 percent – the ability to conduct business from home
More than 90 percent of millennials research a home purchase through the Internet. The PGHI survey found that they’ll also go online to reach out to real estate professionals and even their own parents.
Arthur C. Nelson, professor of urban planning at the University of Utah, predicts that roughly 1.5 to 2 million adults age 65 or older will put their home on the market in the next seven years. Nelson says he sees a growing momentum to downsize.
“This is the decade of the shakeout, where the boomers will begin turning 65 and we’ll begin to see how they influence the housing market,” Nelson told The Chicago Tribune. Nelson cites other research that shows people tend to sell at a faster rate once they hit age 60. Baby boomers began turning 65 in 2011 and the last will hit that age in 2029.
It could represent a lot of homes. About 80 percent of adults own a home when they turn 65.
The news could also benefit commercial developers. Nelson says that about 4 percent of older-adult home sellers opt for a rental once they sell the family home. He predicts a surge in construction of apartments for more affluent renters.
© 2013 Florida Realtors®