Builders Debate a Millennial or Boomer Focus

January 26, 2016

Baby boomers have more income to spend on housing, but the rising number of potential millennial home buyers also has builders frantically trying to meet demand. But millennials and baby boomers differ on their housing preferences, and that has builders stepping back to debate which generation they should cater to.

Millennials now account for 36 percent of U.S. home purchases, compared to 34 percent of baby boomers, according to data presented at the National Association of Home Builders’ annual conference.

For example, millennials are showing a stronger desire for bigger houses with more bedrooms than first-time home buyers from previous generations wanted. What’s more, 48 percent of millennials say they want a home with four-plus bedrooms, while only 20 percent of baby boomers say they want a house that large. Millennials say their ideal home size is 2,375 square feet, compared to the 1,879 square feet desired among baby boomers.

“Millennials have become the top homebuying demographic in the country,” Dan DiClerico of Consumer Reports told homebuilder attendees at last week’s builder trade show. “That’s despite the fact many of them are saddled with enormous student debt and soaring apartment rents.”

Mitch Levinson, with Atlanta-based housing consultant mRelevance, says that millennials are more demanding than previous home buyer generations.

“They are just waiting a little longer to get the American dream because they are not willing to settle for what their parents settled for in a first house,” Levinson says.

But baby boomers are still a big powerhouse in the housing market that can’t be discounted. Seventy-six million baby boomers are in the U.S. alone, and in the next 15 years, the number of Americans over the age of 65 is expected to double.

“Boomers, I’m here to tell you, are the ones you need to build your homes around,” AARP’s Aldea Douglas said at the NAHB tradeshow.

In every state, at least one-third of the households are 55 years or older, says Paul Emrath with the builder’s association. “This market is growing not just in terms of numbers, but as a share of the U.S. population.”

Boomers show a preference for living in suburban neighborhoods and a desire to be near parks, walking trails, and locations that are near retail.

“They are not really looking for golf courses or mixed use other than retail,” Emrath says.

Source: “Cater to Boomers or Millennials? Homebuilders Caught in Between,” The Dallas Morning News (Jan. 21, 2016)