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Developers Give Gen Y What They Want
Patricia Kirk, 24 June 2011, Urban Land
"Most economists agree that home sales will remain in a slump for at least the next few years, but demand for apartments is accelerating. This trend is expected to continue over the next decade, due largely to the echo boom generation's (Echo Boomers) coming of age and entering the rental market.
Born between 1979 and 2000, the nation’s 80 million Echo Boomers, also known as generation Y (Gen Y) or millenials, represent more than 25 percent of the U.S. population. The sheer size of this generation indicates that “its impact on real estate and the economy in general will be as striking and long-lasting as that of the baby boomers,” says Leanne Lachman, Urban Land Institute (ULI) governor and president of Lachman Associates, a real estate consulting and research firm that recently concluded a nationwide survey of Gen Y for ULI.
Both the ULI survey and an earlier study by RCLCO, a marketing consulting and research firm headquartered in the District of Columbia, suggest that this group is the primary catalyst for a surge in urban multifamily development for the near and mid term and for the eventual return of the housing market.
The ULI survey of 1,241, 18- to 32-year-olds revealed that Gen Yers expect to buy a home within the next three to five years. But Patrick Phillips, the Institute's chief executive officer, says he believes this goal may be delayed for years due to fallout from the recession, weak employment, stricter credit rules and mortgage market reforms.
Meanwhile, the rental market will benefit, as Echo Boomers increasingly graduate college, enter the workforce and move into their own digs. “As America’s emerging retail and housing consumers, their activities are crucial to our economic recovery and beyond,” Lachman said.
Carol Ruiz, assistant chair of ULI’s Residential Neighborhood Development Council (Gold Flight), and principal at Red Rocket LA Marketing and PR, points out that Echo Boomers already have massive buying power to the tune of more than $200-billion yearly. “It's been said by experts that if your company doesn't learn [how] to market to this group, you won't have a company by 2020,” she says. Furthermore, the RCLCO survey, which included 3,200, 20- to 28-year-olds, indicates that GenY represents $1.6 trillion in earning power, outstripping the previous generation’s $125 billion in earnings.
Having grown up with technology, Echo Boomers are far more technologically savvy and better educated than any previous generation. However, they are financially challenged due to the poor economy and other factors like a heavy debt load from student loans.
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