millennial trends for the us housing market presentation may 12 2016 2-per-page
TRANSCRIPT
5/26/2016
1
Coming Into Their OwnMillennial Demographics Shaping The Market Ahead
Men Women
“We look at the present through a rear view mirror. We march backwards into the future.”
--Marshall McLuhan
2
5/26/2016
2
Six Generations of Americans321 Million Total Population
23,925,439, 7.4%
31,693,384, 9.9%
62,563,691, 19.5%
79,016,798, 24.6%
49,340,192, 15.4%
74,879,316, 23.3%
Recession 0-5 iGeneration 6-20
Millennial 21-38 Generation X 39-50
Baby Boom 51-69 Older Americans 70+
3
Sources: New Strategist (Definitions), 2016;Data: US Census Population Forecasts 2014-2060, 2015 Report
Where we are now…(MILLENNIAL GENERATION)
6,000,000US Population in 2016
2 000 000
2,500,000
3,000,000
3,500,000
4,000,000
4,500,000
5,000,000
5,500,000Population by Single Year of Age
0
500,000
1,000,000
1,500,000
2,000,000
1 6 11 16 21 26 31 36 41 46 51 56 61 66 71 76 81
4
Sources: New Strategist (Definitions), 2016;Data: Census 2015 Population Forecasts 2014-2060
5/26/2016
3
Five Years Ahead(MILLENNIAL GENERATION)
6,000,000US Population in 2021
2 000 000
2,500,000
3,000,000
3,500,000
4,000,000
4,500,000
5,000,000
5,500,000Population by Single Year of Age
0
500,000
1,000,000
1,500,000
2,000,000
1 6 11 16 21 26 31 36 41 46 51 56 61 66 71 76 81
5
Sources: New Strategist (Definitions), 2016;Data: Census 2015 Population Forecasts 2014-2060
A Decade From Now(MILLENNIAL GENERATION)
6,000,000US Population in 2026
2 000 000
2,500,000
3,000,000
3,500,000
4,000,000
4,500,000
5,000,000
5,500,000Population by Single Year of Age
0
500,000
1,000,000
1,500,000
2,000,000
1 6 11 16 21 26 31 36 41 46 51 56 61 66 71 76 81
6
Sources: New Strategist (Definitions), 2016;Data: Census 2015 Population Forecasts 2014-2060
5/26/2016
4
What Opportunities Do You See Emerging?FAST FOOD RESTAURANT
6,000,000US Population in 2026
2 000 000
2,500,000
3,000,000
3,500,000
4,000,000
4,500,000
5,000,000
5,500,000Population by Single Year of Age
0
500,000
1,000,000
1,500,000
2,000,000
1 6 11 16 21 26 31 36 41 46 51 56 61 66 71 76 81
7
Sources: New Strategist (Definitions), 2016;Data: Census 2015 Population Forecasts 2014-2060
What Opportunities Do You See Emerging?CABLE INDUSTRY
6,000,000US Population in 2026
2 000 000
2,500,000
3,000,000
3,500,000
4,000,000
4,500,000
5,000,000
5,500,000Population by Single Year of Age
0
500,000
1,000,000
1,500,000
2,000,000
1 6 11 16 21 26 31 36 41 46 51 56 61 66 71 76 81
8
Sources: New Strategist (Definitions), 2016;Data: Census 2015 Population Forecasts 2014-2060
5/26/2016
5
What Opportunities Do You See Emerging?PAPER INDUSTRY
6,000,000US Population in 2026
2 000 000
2,500,000
3,000,000
3,500,000
4,000,000
4,500,000
5,000,000
5,500,000Population by Single Year of Age
0
500,000
1,000,000
1,500,000
2,000,000
1 6 11 16 21 26 31 36 41 46 51 56 61 66 71 76 81
9
Sources: New Strategist (Definitions), 2016;Data: Census 2015 Population Forecasts 2014-2060
What Opportunities Do You See Emerging?MEREDITH BRANDS
6,000,000US Population in 2026
2 000 000
2,500,000
3,000,000
3,500,000
4,000,000
4,500,000
5,000,000
5,500,000Population by Single Year of Age
0
500,000
1,000,000
1,500,000
2,000,000
1 6 11 16 21 26 31 36 41 46 51 56 61 66 71 76 81
10
Sources: New Strategist (Definitions), 2016;Data: Census 2015 Population Forecasts 2014-2060
5/26/2016
6
Coming Into Their OwnUS Millennials Enter The Homeward Years
Underpinnings of Millennial Homeownership.Source: Zillow 2016
1. U.S. millennials (age 21-38 in 2015) total 79 million individuals and 24 million independent households
2. The median age for first-time homebuyers has remained virtually unchanged for the past 40 years: In 2015 it was 31 years old, compared with 30.6 in 1970-74
3. 62% of millennials haven’t reached that homebuying age of 31, and 22% are under 25 years old
4. Millennials are renting for a median of six years before buying, compared with a median of five years for renters in 1980 y
5. Millennials are expected to form 20 million new households by 2025
6. The median income for a millennial older than 25 is $38,220
12
5/26/2016
7
89% of Millennials “want to own a home.”When they will buy is the question.
13
Housing LifestagesSource: Robert C Lesser, 2016
HOUSING NEEDS:
2015 2020 2025
St d t R t l H iStudent Rental Housing Millennials Gen Z / Millennials Gen Z
Singles / Roommate Rentals Millennials Millennials Gen Z / Millennials
Young Couples Rentals Millennials Millennials Millennials
Buy Entry Level Millennials / Gen X Millennials Millennials
Buy Upgrade / Move-Up Home Gen X / Baby Boomers GenX/Millennials /Baby
Boomers Millennials/Gen X
Buy 2nd Home G X / B b B G X / B b B Mill i l / G XBuy 2 Home Gen X / Baby Boomers Gen X / Baby Boomers Millennials / Gen X
Buy Empty Nester Home Baby Boomers Gen X / Baby Boomers Gen X / Baby Boomers
Buy Retirement Housing Baby Boomers / Silents Baby Boomers Baby Boomers
14
5/26/2016
8
Millennial Choices for Housing 2016Location and Type
Source: Robert C Lesser Survey: January 2016Householders Age 25-34
13%
7%
3%
31%
23%
8%
4%
Suburban Mixed Use
Suburban -- Residential
Small Town
Rural Area
Householders Age 25 34
Buyer Renter
23%
25%
29%
12%
22%
0% 5% 10% 15% 20% 25% 30% 35%
City - Mixed Use - Apartments
City - Mostly Residential
Suburban - Mixed Use
15
Household Growth 2015-2020Overall for US: 4.0%
16
5/26/2016
9
Kinds of Markets to Keep an Eye On.
17
Millennial Markets
18
5/26/2016
10
Millennial Markets:New York City
19
Millennial Markets:Des Moines, IA
20
5/26/2016
11
Millennial Markets:Portland, OR
21
Issues: Housing supply has gone from surplus to shortage.
22
5/26/2016
12
Issues: The Right Kind of Housing
23
Issues: Changing preferences & behavior
24
5/26/2016
13
Issues: Home Ownership’s Downward Trend
25
Issues: Misalignment of Supply
26
5/26/2016
14
Opportunity for Midwest leadership?
27
Issues: Size of Home
28
5/26/2016
15
Issues: Misalignment of Size
29
Opportunity for Small Space Housing?
30
5/26/2016
16
Small: Then & NowLevitt Cape House 1947Levittown, NY
DR Horton Express Aria 2016Huntsville, AL
31
Small isn’t what it used to be.Levittown Cape Floorplan750 square feet
D. R. Horton Express Floorplan1,618 square feet
23%23%16%
32
5/26/2016
17
Why Buyers Chose Existing Homes
Source: Robert C Lesser Survey: January 2016Factor Rated 0-1,000
575
350
245 215165200
300400500600700
Millennial (25-34) Home Buyers in 2015
250
100
Price/ Value More for $ No NEW homes where wanted
to live
Larger Lot Not Around Construction
Other
33
Where the older homes are.
34
5/26/2016
18
The big similarity between Boomers and Millennials: Do you see it?
Population in 1980227.22 million
Population in 2016 322.07 million
2,500,0003,000,0003,500,0004,000,0004,500,0005,000,0005,500,0006,000,000
2,500,0003,000,0003,500,0004,000,0004,500,0005,000,0005,500,0006,000,000
0500,000
1,000,0001,500,0002,000,000
, ,
1 11 21 31 41 51 61 71 81
35Source: Census, 1980 & 2015
0500,000
1,000,0001,500,0002,000,000
, ,
1 11 21 31 41 51 61 71 81
Goldman Sachs on Millennials and HousingKey Findings – January 2016
1. Millennials marry and have children later in life than earlier generations, but they expect to eventually marry and have children.
2 Littl id th t t d t t t b h t i i2. Little evidence that young renters do not want to be homeowners anymore post crisis. However, there is some evidence that young homeowners increasingly prefer multi-family housing and
living closer to work.3. Young individuals with high school degrees or less face falling income and declining homeownership rate. 4. Borrowing money for college has costs and benefits when it comes to housing consumption.
The benefits outweigh the costs as long as the debt burden is not too large, the borrower finishes college, and the college degree offers better income prospects
5. Tight mortgage credit hurts young individuals the most. 6 House price appreciation has outpaced income growth over the past 15 years6. House price appreciation has outpaced income growth over the past 15 years.
The lack of affordable entry-level homes on the market is a headwind to the millennials’ homeownership rate.
7. Labor market conditions continue to improve and wage inflation should slowly pick up. Young individuals are also more optimistic about future income growth. These are positive signs for housing demand.
36
5/26/2016
19
A Word About Student DebtBrookings Findings: August 2015
37
Millennials: Lots of help
38
5/26/2016
20
Result: Housing rebound will continue
39
Result: Increasing remodeling expenditures.
40
5/26/2016
21
“A new medium is never an addition to an old one, nor does it leave the old one in
peace. It never ceases to oppress the older media
until it finds new shapes and positions for them.”
– Marshall McLuhan, 1964
41
Outread the CompetitionSome recent generous books
42
5/26/2016
22
Tom’s Rules (Revised)
1. People tend to get one year older every year
2. People tend to do the same (important) things at p p gpretty much the same time in their lives
3. Everybody has to be somewhere
4. NEW: We shape our tools. Thereafter our tools shape us
5. CLARIFIED: If we do what we always did, we’ll get the kind of results we always got… but less and less each time
6 NEW: Love what you do6. NEW: Love what you do
7. NEW: Don’t stay in love with how you do it
8. NEW: If you don’t like change, you will like irrelevance even less.
[email protected] / 516-765-0298
[email protected] / 516-765-0298