Uncategorized March 24, 2017

The Tortoise and The Hare, 2017’s Generational Real Estate Race!

The Tortoise and The Hare, 2017’s Generational Real Estate Race!

In the old Aesop fable, the quick and confident hare would be the, self assumed, glorious champion of their impending race. His ingenuity, trickery, and speed was hard to match. The tortoise, in his deliberate doggedness, slowly moving, but always in the direction of his goal, ended up crossing the finish line first, while the hare slept on his obvious advantages and assumed outcomes. Can this tale be a primer for the impending generational race in the 2017 housing market? Will the quicker moving millennials learn from the hare, and stay focused to the end of their race with the slower, more persistent, baby boomers?  The race begins fully this spring, and may not last as long as the tortoise would like.

Both of our largest generations, the boomers of 77 million and the millennials of 83 million, are set to dominate the housing market in 2017, with millennials making up 33% of projected purchases, and the boomers projected to come in with 30% of all home purchases. Both generations are motivated to buy. The oldest millennials are approaching their mid 30’s, and are becoming primed to settle down, with many marrying and having kids.  There are also more jobs being created for 25-34 year olds than any other age group. This stability in jobs is fostering a desire for stability in living accommodations. Many boomers, in contrast, are retiring. Some want to downsize, to control their expenses, while others are moving to the biggest homes they’ve ever owned, to make room for children and grandchildren to visit, even moving to be closer to them. The market demand is there, but what of the supply? How much of the trail do they have to race?

The housing inventory is down an average of 11% in the top 100 markets nationally. This lower supply is creating an even higher demand, with homes projected to sell 2 weeks faster than a year ago (Natl. Assoc. Of Realtors). In addition, with interest rates expected to slowly increase, the quicker the better, for those looking for the best long-term investment. With fewer homes, moving more quickly, competition for available homes will be high. But when will the race begin? Statistics show spring is when the starting gun echoes throughout the housing market, with homes more available for pleasurable viewing, a shift in seasonal consciousness encouraging change, and inventories at their highest for the year. During May 1 through 15, homes sell 9 days faster! Spring is here! The race has begun.

With the market moving fast, that is an advantage to millennials, who enjoy expedience and a disdain for delay.  They, however, prefer to keep their time and commitments flexible longer, in order to take advantage of better options (New Jersey Institute of Technology). This may be an advantage to the more home buying experience of boomers, though millennials are very well researched and may realize the urgency to commit. Millennials also learn by doing. Boomers do have the wisdom of experience, and the spending power, with many already owning homes and having the credit and equity to work with. Though, lending is expecting to increase with the forecasted deregulation plans of the new presidential administration. So many variables, only time will tell..

The Hare was once boasting of his speed before the other animals. “I have never yet been beaten,” said he, “when I put forth my full speed. I challenge anyone here to race with me.”

The Tortoise said quietly, “I accept your challenge.”

“That is a good joke,” said the Hare; “I could dance round you all the way.”

“Keep your boasting till you’ve won,” answered the Tortoise.

“Shall we race?” (Aesop)