Jesse Roberts
Multi-generational households impact home-buying trends
The hunt for a new home is just that—a hunt. Exploring each new neighborhood, the prospective buyer casts a careful eye upon each detail of the community. Is this the place they want to go for a jog? Will the training wheels of their young child’s bike rattle down that sidewalk? Is this a place they can age in? All these questions race through their minds as they look at house after house. But in the current market, there is more to think about than picking a cape cod cottage or classic colonial—knowing the ins and outs of current market trends can help you understand the fast pace of the real estate market.
To help homebuyers understand what the market is currently doing, it can be helpful to seek the advice of an experienced realtor. Jim Fox is the 2017 president of the Akron-Cleveland Association of Realtors and V.P. of General Sales and Operations at Stouffer Realty, Inc. The market is strong right now, with homes selling quickly—often for more than asking price. In a classic case of supply and demand, there is also a diminished inventory of homes available, helping drive up the price of those on the market. “There are a number of contributing factors,” says Fox. By breaking down the elements of the housing market, an experienced expert can help homeowners learn why the market is the way it is.
Multi-generational households
Each family is made up of multiple generations, each with its own set of needs for a home as they age. To examine this trend, we will look at the parents of Boomers, Boomers themselves, and Boomers’ children, the Millennials.
The parents of Boomers have seen a lot throughout the years. They have built their families and developed a solid foundation for the traditional family. However, as they grow older, a decision looms on the horizon. Do they remain at home or enter a costly assisted-living facility? Living in their home independently may not be an option as they age because of the difficulties of managing the property alone. Medical assistance may also be a concern. Fox says that all these factors contribute to a solution that is becoming more common. “The cost of assisted living for Boomers and their parents [is high, so they] bring them to live with them,” he says. A compassionate solution, cohabitation may solve the problem for elder parents, but can be difficult for Boomers.
Facing retirement, Boomers are finding themselves in a unique situation. Their generation is earning a new, secondary nickname: the Sandwich Generation. According to AARP, the typical member of the Sandwich Generation is between 40 and 65 years old and cares for both children and parents at the same time. “Boomers [are] finding kids coming back home,” says Fox. “The family dynamic has changed.” With norms pushed aside, Boomers are now sharing their homes with their parents and their children. Instead of downsizing or moving to the house of their dreams, they stay put and provide support to their family members.
While the Boomers are sandwiched in the middle, the Millennials are returning home. When a child enters adulthood, what are they supposed to do? Traditionally, the cycle goes like this: go to college, get a degree, find a first job, work your way up the ladder while saving money, buy a small starter home, have a family, move to a larger home, retire and downsize. Unfortunately, Fox says this is not the reality for those in the Millennial Generation—one of the largest populations in the real estate market. “They come with bigger debt than previous generations,” he says. Fox points to the massive amount of college debt that accompanies each millennial graduate as a hurdle that can trip them when entering the housing market. The second hurdle is rental property. “The rental market is higher,” he says. Once again, supply and demand enters the picture. Millennials who cannot buy a home and do not live with their parents have to live somewhere. Because they create a higher demand on temporary homes, rental properties can charge more and more. As the rental prices rise, saving money becomes a real challenge for this generation. “How to save money? Maybe move back home, and that’s the sacrifice [Boomers and Millennials] both have to live with,” Fox says.
Low Inventory
The low available inventory of homes is also centered around Boomers and Millennials, creating a circular effect in the current market. Because the Boomers are staying put to both help their parents avoid costly assisted living facilities and help their children save money for a home of their own, there is a short supply of homes on the market. When a new buyer enters the market, they have to act fast and often enter a bidding war with other buyers to purchase their first home—driving the price of the home upwards. Millennials also have developed particular tastes that impact their hunt for a home. “Millennials want different things in their first home,” says Fox. Instead of purchasing a more affordable home that needs improvements, Fox says that younger clients tend to want finer features, like granite countertops and hardwood floors, contributing to the demand for higher-end homes. “Those are all challenges in our industry that aren’t going away,” he says.
New Construction
“Another cog in the system is new construction,” says Fox. “It’s anemic right now.” Once again, where homeowners used to move up the chain of homes as they aged, they are now stationary. The cycle of home ownership has been disrupted. “When you build a new home, that sale will push [other] new homes to be sold,” says Fox. “When new construction shuts down, you lose homes to be sold.” The lack of new construction homes on the market exacerbates the already limited inventory.
There is no room for hesitation in this current tight market. “If a buyer wants to buy, they can’t hesitate. The houses go fast,” says Fox. On the flipside, sellers who prepare will be pleased. “To get top-dollar, your house has to be as shiny as it possibly can,” says Fox. Homeowners who limit the clutter and present their home in the best possible light can see quick results in this market. “There are some properties where you’ll have a dozen showings in a few days and you’ll have a handful of offers,” says Fox.
The real estate market can be difficult to navigate, making a knowledgeable realtor an important part of the process. Find the right realtor for you and ask them how they can help you find your dream home.
