Boomer Lifestyle Choices Crowding Out Young Families
Plus, S&P 500 hits all-time record, Canadian homebuilders extorted by Indian gangs, and a look at why some companies are opting for a post-pandemic "no frills" approach to office space.
BOOMERS VS. MILLENNIALS: THE BATTLE FOR BIG HOMES
A recent look at U.S. Census data by Redfin reveals a striking disparity in homeownership: Baby Boomers are dominating the market for large homes, with ownership rates double that of millennials who have children.
🏡 Generational Divide: Empty-nest boomers hold 28% of the nation’s spacious residences, while their millennial counterparts, even those raising families, own just 14%. This gap has widened over the past decade—once upon a time, young families were equally likely to own such properties.
💼 Historical Advantage: Why this discrepancy? Economics and timing play key roles. Many boomers have paid off their mortgages and benefit from low monthly costs, with no pressing financial reason to downsize. In stark contrast, younger generations face record-low affordability and a dearth of available larger homes due to sluggish construction and high interest rates.
🚶♂️ Lifestyle Choices: It's not all about availability or economics; some millennials simply prefer urban living close to amenities over the maintenance and commitment of large-home ownership.
📈 Boomer Wealth Accumulation: Favorable conditions during their prime earning years allowed many boomers to amass significant wealth—much of it tied up in real estate—making them less inclined to sell.
🌊 Market Movement Predictions: Redfin Senior Economist Sheharyar Bokhari suggests we won't see a deluge of large homes on the market anytime soon. While there may be a "trickle" due to some downsizing or retirement moves, most boomers have little incentive to sell.
🏘️ Rental Trends: As a result, many millennial families are turning to rentals for more space—with this demographic making up the largest share of three-bedroom-plus rental occupants.
✨ Silver Lining for New Home Buyers: Those looking for more room might consider new constructions. Builders are eager to offload pandemic-induced surplus inventory through incentives like rate buydowns or upgrades.
🔎 By the Numbers - Ownership Landscape: In every region across the U.S., empty nesters occupy at least 20% of large homes. Millennials with kids never breach an 18% ownership rate in any metro area. The highest concentrations of boomer-owned large homes are found in affordable regions like Pittsburgh and Birmingham, while coastal California sees lower percentages due to higher prices.
Access the data and read Redfin’s take, here.
Links of the Day
🧑🏫️Our Picks
International RE Crime Spree: 🌍 Edmonton's South Asian community targeted by extortionists from India, resulting in arsons and shootings as local police team up with national forces to tackle the threat.
No Frills, No Problem: 🛠️ With nearly 900k sq ft snapped up by cost-conscious businesses, Manhattan's Class B buildings defy "obsolete" labels as leasing hits a post-2019 high.
Sky-High Deals Despite Vacancy Woes: 🌁 Record-high vacancies can't deter massive leases like Weill Cornell Medicine's expanded footprint at 575 Lexington Avenue.
Mortgage Momentum: 📈 Applications surge 10.4% as rates dip to 6.75%, with refinance and purchase activity both climbing. Optimism cautiously rises for homebuying rebound.
🏭Industrial
CapRock Partners' Phoenix coup:🏗️ Acquires 249,844 SF industrial hub, fully pre-leased at escrow close, cementing its role in the city's supply chain expansion.
👪 Multifamily
Profit or Providence? 💸 A real estate venture with far-right connections promotes a residential project in Kentucky, raising eyebrows over the high costs to join the 'aligned community' and their business motives.
Strategic Acquisition Alert: 🔑 Blackstone secures Tricon Residential for $3.5B, setting sights on capitalizing within the stable single-family rental sector.
🏷 Retail
Fashion Frenzy in the Big Apple: 👗👜 Iconic brands like Dolce & Gabbana and Prada make big moves, signaling a robust recovery in NYC's luxury retail market post-pandemic.
💼 Office
NYC's office market comeback? 🏗️ RXR and Ares Management launch a daring $1bn fund targeting distressed properties, betting on a revival post-remote work era.
Office Omen: 🏙️ South Florida's outer-ring commercial properties face trouble, warns CBRE economist Spencer Levy. Banks' balance sheets are burdened with excessive loans as tech leases wane and financial firms' influx stalls.
💲CRE Finance
Rent vs. Own Race: 🏁 Despite wage strains, renting a three-bedroom home beats out buying in the affordability stakes across America, according to ATTOM’s latest data.
Consumer Confidence Climbs: 📈 US sentiment soars to 2.5-year peak, with inflation fears cooling and optimism fueling economic hopes for 2024.
🛍Grab Bag
Client Captivation: 🌐 Stand out with 12 top real estate tactics. Specialize, socialize, and strategize for market success from industry-leading experts.
Interest rate outlook: 🔮 Bostic from the Fed hints at Q3 rate cuts amidst improving inflation landscape, urging vigilance and data-driven decisions in uncertain times.
Airbnb's housing hustle: 🏘️ Launching a new council to tackle affordability woes, the vacation rental giant aims to boost supply & cool down prices with ex-Baltimore Mayor at the helm.
📊Daily Data Visualization
As the stock market celebrates new highs, with the S&P 500 closing at a record-breaking 4,839.81, the real estate sector looks on enviously, hoping to ride the wave of investor optimism that has taken hold of the broader market.
A Record-Breaking Day for Stocks and Real Estate Prospects
On Friday, alongside the S&P 500's climb, both the Dow Jones Industrial Average and Nasdaq Composite experienced significant gains. The Nasdaq-100 hit a record high, echoing positive sentiment across various asset classes.
This fervor is also reflected in commercial and residential real estate markets where investors are showing renewed interest, particularly in the residential space, with several regions benefiting from recent interest rate moves.
Consumer Confidence Catalyzes Market Moves
New consumer data indicates a growing confidence in economic recovery and tempered inflation concerns—sentiments that could translate into increased spending on big-ticket items like property investments.
Highlighted moves from key players in various sectors:
Crypto Echoes Equities' Enthusiasm
In tandem with equity markets, cryptocurrencies like Bitcoin and Ethereum saw an uptick despite facing overall weekly losses. This alignment suggests that general market optimism is influencing investor behavior across both traditional and digital asset classes.
Looking Forward: Will the Real Estate Space Benefit from Bullish Outlook?
Despite recent gains, investors still have questions, like: Will this bullish outlook extend to property markets throughout 2024? And how will Federal Reserve policies influence investment strategies in tangible assets like real estate?
We will just have to wait and see.
That’s all for today, but we’ll be back tomorrow with your daily dose of the commercial real estate stories you need to read. See you soon.
