When it comes to homes, there’s no one size fits all – or in this case, one size fits all generations. Individuals and families age and transition, and so do their real estate needs. While one segment may be snatching up luxury condos downtown, others may be searching for a sprawling estate on land. Knowing what each generation is seeking in their next home will make you a better seller or investor. From Generation Z to Baby Boomers and in between, each group requires specific needs and desires in their homes.
By far the youngest of the generations, the vast majority of Generation Z is still in high school with the oldest just now reaching their mid-twenties. You won’t find many Generation Z buyers. Instead, these are the young adults staking claim on the rise of communal multi-family student housing popular in many college towns. Due to secondary education, crippling student loans, and transitional life plans, most are opting to rent rather than buy – primarily due to finances and primarily due to much of their future is still up in the air.
Steve Cook, former VP of Public Affairs at NAR, explains that “though the oldest members of Generation Z are just entering home-buying age (23-25 years old), they have learned a lot from their millennial brothers and sisters”. A recent PropertyShark study found Generational Zers would sacrifice location and an easy commute, but not space and amenities such as smart appliances and smart homes. He goes on further to state that “Generation Z also prizes parking space far more than energy efficiency in a home, quite the opposite of Millennials”.
You can expect a heavy demand for communal style apartment living as Generation Z leaves on-campus student housing. With demand for convenience, technology, and location, you’ll find these young adults cohabitating for financial reasons and also a desire to be near the hub of the social scene.
By and large, this is the group that wants to buy houses – eventually. With the youngest of millennials fresh out of college and the oldest creeping on 40, these young professionals are balancing work life, home life, social scene, finances and budgeting… and student loan debt. Researchers have found that home ownership declined the most significantly in the age group of 30 and below. This decline is attributed to student loan debt and also to a delay in millennials marrying & having children as opposed to previous generations.
Statistically, the millennials that have purchased homes are the ones that have settled down with a family – although there are single millennial homeowners. Whether they’re buying or renting, the Millennial Generation is the driving force in real estate. With over 80 million millennials, this group has the numbers to dictate not only the home buying market but the rental market as well. Specifically, millennials tend to start gravitating towards the suburbs as they age, while the youngest of this generation still opt for downtown city living. While Generation Z is all about the communal multi-family housing, 75% of millennials are opting for single-family homes. Not surprisingly, technology is also a large factor for the Millennial Generation, including green technology.
More removed from transitional and communal living, Generation X ranges from mid-thirties to pre-retirement. With almost 62 million people in Generation X, this group has distinctive needs that set them apart from Generation Z and the Millennial Generation. By and large, Generation X has made the trek to a single-family home in the ‘burbs. This generation typically resides in larger homes due to expanding families, multi-generational housing due to aging parents, and also due to increased salaries and financial stability.
With increased financial stability, Generation X can afford to buy nicer, larger homes that sit on spacious lots. This generation isn’t looking to be in the middle of the hustle and bustle. Instead, this generation may want more land to “play on,” media rooms to lounge in and enjoy at their leisure, and expansive, professional kitchens for entertaining. Interestingly enough, this is also one of the generations that earned their stripes in real estate by buying and surviving (or not) the recession, so as they recover, they may also be timider in their purchases.
Near the top of the largest home buying generation is the Baby Boomer Generation, with 32% recently buying homes. With the youngest boomers in their early 50s and most retired from their careers, this generation is arguably the most financially secure. While many opt to “age in place,” their needs may change over time. Due to age and health, many baby boomers prefer smaller, one-level single-family homes. Boomers are seeking low-maintenance finishes, flexible spaces, and accessible design. Experienced in home buying (and selling), baby boomers are cautious and precise when buying a home. They typically know what they want and don’t want to settle.
Baby boomers are also more likely to pick up stakes from their homestead and head to sunnier destinations like Florida. In part to the boomers, resort market sales increased by over 50% in the last year. The majority of baby boomers are female, over 50% actually, and as they continue to age, a new multi-generational trend has developed – Granny Pods. This new trend allows female boomers to maintain independence while being near family as they age in place.
There Is No One Size Fits All
While one home might fit one generation, it may be totally wrong for the needs of the next generation. Each generation has specific preferences to meet their needs. However, combined these generations are dictating the future of real estate and home design.