"Real estate is local" is a saying that will not go away because it's very true. Every market has some unique characteristics from regional down to neighborhood levels. There are however global and national factors that have an impact all the way down to neighborhood or city levels. On the national front, we have an aging population with around 10,000 Baby Boomers reaching retirement age every day. Some of this group managed to profit from owning homes prior to the crash, but others were caught in the equity downdraft from 2007 forward.
We also have a growing group of younger generation citizens who are in the workforce and in need of housing for their families. This group has watched as their relatives and friends who owned homes lost them to foreclosure or are struggling with unaffordable mortgages that are underwater, more owed than the home is worth. They're not excited about buying a home right now. They're also not thrilled with their employment and career growth in the current economy.
Though there is 20-30+ years separating these two groups in age, there are some similarities in their current goals and outlooks that are influencing housing demand. You could be an investor trying to determine good areas in which to invest in rental property, or a consumer moving and wanting to locate to an area that is desirable and will appreciate in value if you buy. Even the younger college graduates searching for a great career start will have some goals common with the retired generation.
We're tired of driving everywhere.
We may on the whole still love our automobiles, but we're not as thrilled with a need to drive to the store, the movie theater, a museum or cultural event, or to the doctor or hospital. Every age group is demonstrating a preference for "walkable" neighborhoods. Old and young alike are searching for a place to live that allows them to leave the car in the garage for a weekend trip. They want to walk more to the daily activities we enjoy in life.
What does this mean to real estate and the market analysts? There is definitely a lot more activity in re-development in urban areas. The rejuvenation of older city centers is happening around the country. Of course the goal is to create a vibrant economic center with entertainment, restaurants and necessary support businesses in order to draw people. Those people will want to be housed close-by, and that's one reason apartment construction has been booming.
Older or younger, people want to socialize with others holding the same interests.
The retired generation wants to gather for activities they like, and they want to be able to easily reach restaurants and entertainment where their friends are gathering. The younger generations have grown up with Facebook and geolocation on their phones. They all know where their friends are in real time. Being close-by in more urban centers allows them to meet-up casually, without the need to plan and organize transportation or figure out where to park.
There's work at all levels in these rejuvenated urban areas.
A lot of this activity is found in areas with high tech companies and their headquarters. There are also benefits to other corporate types in urban areas, especially as cities are now luring them with tax breaks and other incentives.
These companies hire at all levels, from software programmers to janitors and cafeteria workers. They are hiring all age groups as well. Many companies have recognized the value of the experience of retired or semi-retired individuals, and they seek them out for positions, full time and part time. There is employment opportunity in these generational melting pots.
Investors should be investigating local plans and existing projects that are drawing people to urban areas. The one way in which these age groups will not always come together is in the features they want in a residence. There will be different requirements and feature demands, but we can't melt everything together.