The Great Recession of 2008 Has Fundamentally Altered Where Americans Live
If you are a fan of real estate, you’ll be interested in reading about the Price Waterhouse Coopers (“PWC”) report, called, “Emerging Trends in Real Estate: 2018.”
Each year, PWC sends out surveys to real estate professionals to find out what’s happening in their businesses related to real estate. The top respondents to the surveys this year were private property owners or developers (34%) and real estate advisory or service firms (26.8%), but there were also other respondents such as lenders, home builders and investment managers. PWC surveys respondents related to real estate and that’s how the yearly trends are established.
There are a lot of interesting aspects about the PWC report, and we’ll be writing a series on the trends in the months ahead. However, early in the report, PWC has some interesting information about people – specifically the different generations – which is important to real estate, because what people are doing, along with the economy, are two major factors that influence the real estate market.
It’s interesting to note that it’s been ten years since the financial crisis of 2008, and it is impossible to disconnect the crisis from today’s real estate market. The financial crisis redirected the lives of three generations of Americans and has also influenced the trends in real estate.
Pre-recession, most Americans expected to climb the career ladder, enjoy increased earnings as they reached their peak earning years, buy a home in the suburbs, acquire assets, enjoy their lives and enjoy a good standard of living. However, the recession changed all that.
The PWC report notes that baby boomers were expecting to retire early to live somewhere warm and enjoy spending their money. However, for many boomers, that has changed – the financial crisis impacted this generation at a critical point in their careers. Many will continue to work due to financial necessity, or because they want to. If they decide to leave their homes in the suburbs, it will likely be to move closer to their children or to a more urban area.
Similarly, Gen X was expecting to live a lifestyle similar to the boomers, with big houses in the suburbs, a byproduct of making solid career progress. However, the impact of the financial crisis on Gen X has been lower rates of home ownership, more focus on work/life balance, and less financial security for retirement than previous generations. The crisis happened while many Gen X’ers were still early in their career, but the shifts as a result of the crisis were deeper and more fundamental, which could have led to the increased focus on work-life balance.
Millennials are very different than Boomers and Gen X’ers. They like the “sharing economy” (think rideshare) and love living in the suburbs, but their finances will probably keep them in the city unless they are getting married or forming households. The crisis happened when this generation was graduating from college and preparing to enter the work force, and the shift in the overall economy perhaps hit them the hardest. Millennials are expected to stay in urban areas, but they will consider some suburban areas depending on cost and their overall quality of life.
The fourth generation is called Gen Z, born from 1995-2001, is different from the three previous generations because it has had access to technology from birth, but will grow up in the sharing economy, and will likely live in urban areas too. Gen Z is expected to continue to solidify the trends established by Millennials. Demographers don’t yet know as much about Gen Z, such as what will happen when they retire, because they are still too young. However, they may be the least impacted by the recession because the present economic conditions are all they’ve known.
The information in the PWC report related to the differences in generations has some obvious themes: more people moving to urban areas, lower rates of home ownership, and people working longer. All of these trends have much to do with where people live and how they use their space.
What do you think about the PWC 2018 report’s views on the generations? Leave us a comment below! And, if you enjoyed this blog post, please subscribe, like and share.
© Gormley Law Office 2018
Brian Gormley, Esq. is an attorney licensed in Maryland and the District of Columbia specializing in real estate, probate, estate litigation and other matters. If you need assistance, please use the Contact Feature at the bottom of this page.