Twenty-four-year-old Jonathan Hong is a member of the Millennial generation, and he represents the type of buyer that could make builders very happy in the very near future.
An electrical engineer, Hong bought his first home in 2008 just one year out of college. “I didn’t see the need for a condo or an apartment,” Hong says. “I wanted something not too big and not too small, so I thought a townhouse would be perfect for me. Truth be told, I wasn’t thinking about location. I think cost played a big factor.”
With married couples becoming a smaller share of the home buying population and unmarried-partner, single-parent, and single-person households increasing, the Millennial generation is emerging as a heavyweight in housing. By the sheer force of their numbers—which is reportedly between 80 million and 90 million—Millennials (also referred to by the less popular Generation Y) are poised to change the home buying and building landscape. Builders, developers, and real estate professionals who ignore this group do so at their peril.
“Real estate agents may wonder why they should care about the Generation Y age group, ages 18 to 30,” Jessica Lautz, a senior research analyst at the National Association of Realtors, wrote on the organization’s website in 2008. “These unique home buyers are the youngest of the home buying segment and are the most likely to purchase a home in the next two years in comparison to any other age group.”
“The bulk of this group right now is in college,” says Shyam Kannan, vice president and director of research and development at Bethesda, Md.–based Robert Charles Lesser & Co. (RCLCO), a consulting firm to the home building and development industry. “Let’s assume they begin to graduate from college in 2010, 2011, roughly about when they turn 22, and they rent for two to three years. They’ll start hitting the home buying market in 2013, and by 2015 they’re in the peak time for home buying. Just in terms of numbers, this group is hugely important.”
According to NAS Recruitment Communications, a Cleveland-based human resources research firm, Millennials include individuals born between 1977 and 1994 (though some demographers mark the dates from 1982 to as late as 2003). “The largest generation since the Baby Boomers, the Millennials are defined by their numbers,” the group writes in its report “Generation Y: The Millennials—Ready or Not, Here They Come.” “They will have a huge social and economic impact.”