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Which groups will influence future housing trends?

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WASHINGTON – Oct. 13, 2016 – Rising numbers of female executives, affluent immigrants, younger and older workers, and retirees will have a profound influence on community building in the U.S. over the next 10 years, according to a new Urban Land Institute (ULI) report, Demographic Strategies for Real Estate.
According to the report, these key demographic drivers present opportunities for real estate professionals:
The continued rise of working women – Women now earn 58 percent of all college degrees in the U.S., and they earn more than their spouses 38 percent of the time. By 2025, the number of women in the workforce will rise to 78 million, 8 million above the level in 2015.
A rising number of affluent immigrants – Immigration will account for more than half the U.S. population growth by 2025, assuming current trends continue. Contrary to some perceptions, many immigrants coming to the U.S. are highly educated middle- and upper-class families with substantial purchasing power.
The graying of America – By 2025, 66 million Americans will be over age 65 – 38 percent more than in 2015. This will create opportunities for customer segmentation, given the widely varied needs and lifestyles of younger retirees versus older ones. The surge in retirees will also create more opportunities for workers, driving incomes up for many occupations.
Young adults driving household formation – 44 million 18-to-27 year olds born in the 1990s will lead the majority of new household growth over the next decade, despite forming households more slowly than their predecessors. They are expected to create 14 million households by 2025.
“This research reaffirms the extraordinary impact that demographic shifts have on real estate investment and development decisions,” says Robert Bowman, a chairman with ULI’s Residential Neighborhood Council. “Being successful in this industry means being on the front end of trends, thinking about what those trends mean for the long-term, and being able to correctly anticipate how and where people will want to live and work in the years ahead.”
In terms of land use and development, the report predicts that the suburbs will draw about 79 percent of the coming wave of new households, as younger families seek “surban” communities that combine the best of urban and suburban living. Many will choose to rent rather than own homes, pushing up demand for single-family rentals in particular.
The report groups the U.S. population by decade born, rather than by generation, to draw conclusions about behaviors shaping trends, with the most influential (and largest) groups being:
Innovators, born 1950-1959, who led a technology revolution
Equalers, born 1960-69, which became the first group with women achieving higher education levels than men
Balancers, born 1970-79, who led a shift toward achieving a better work-family balance
Sharers, born 1980-89, who led the transition to the sharing economy, which includes a higher preference to rent
Connectors, born 1990-1999, who led 24/7 wireless connectivity
Globals, born 2000-2009, who think and interact globally due to their many multi-cultural connections and free-flowing information
Among the trends shaped by these groups:
“Surban” developments will replace shopping centers – More retail stores will be transformed into places that sell experiences rather than goods, and more development will combine housing and retail to satisfy consumer demand for places that offer convenient, car-free shopping. An 86-percent surge in household formations in the coming decade will drive retail activity, particularly purchases by renters.
Suburban office demand will return – As 1980s-born Sharers move into more senior management roles and start families, many will move from urban cores to the suburbs to live in areas with good schools that are also near employment hubs, entertainment and recreational amenities. They will be willing to share space and work remotely. Female executives will play a stronger role in office space selection.
Housing rental rates will surge over the long term – The sharing economy’s de-emphasis on ownership will be reflected in soaring demand for rental units. Well over half of the 12.5 million net new households created over the next decade will rent, including those who have never owned, and those making the switch from owning to renting as they age. Homeownership will decline, with the national rate anticipated to be 60.8 percent by 2025, the lowest point since the 1950s. As more Innovators join the already large number of retirees, competition for workers will push up wages, contributing to a favorable environment for rent increases.
Southern suburban migration will continue – The southern regions, where 42 percent of Americans currently live, will receive 62 percent of the household growth in the U.S. over the next decade. Demand will continue to rise for affordable rental housing, townhomes and small-lot detached housing, as 1990s-born Connectors join Sharers in raising families.
Municipalities will take a stronger role in encouraging successful growth – Local government redevelopment investments have revitalized urban and suburban areas, and the most astute suburban – or surban – municipal leaders will continue changing zoning regulations to encourage mixed-use, pedestrian-friendly development that accommodates the preferences and needs of new households.
The predictions in the report are based on several macroeconomic assumptions:
The economy will slow in the next few years and achieve 2 percent average real GDP growth over the decade
The influx of immigrants will remain at about 1.2 million per year
There will be no significant changes to federal entitlement programs such as Social Security and Medicare
Rising college tuition costs and student debt will continue to delay marriage and childbirth
Life-extending technology will allow women to have children later in life and allow older adults to remain active
Slightly higher mortgage rates will make homeownership more expensive
Rents and home prices will rise slightly faster than incomes each year  

Source: Florida Realtors Feed

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