Millennial Preferences for Residential Real Estate Where are the - - PowerPoint PPT Presentation

Gregg Logan, Managing Director

Where are the Millennials Going? A ULI Central Florida “Candid Conversation”

Millennial Preferences for Residential Real Estate

ULI Central Florida | January 13, 2016

GEN Y AND BABY BOOMERS LARGEST SEGMENTS IN FLORIDA

9.5% 12.9% 22.6% 24.2% 21.1% 20.8% 27.4% 25.2% 19.3% 17.0% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% National Florida Gen Z Gen Y (Millennials) Gen X Baby Boomers Eisenhowers

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2015 Age 0-14 15-34 51-69 70+ 35-50

Source: U.S. Census Bureau, 2013 American Community Survey, 1 Year Estimates

ULI Central Florida | January 13, 2016

FLORIDA MILLENNIALS IN URBAN AREAS

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Percent Millennials Counties 24%

• 30%

21%

• 24%

18%

• 21%

15%

• 18%

9%

• 15%
• College towns of

Gainesville and Tallahassee unsurprisingly have highest concentration of Gen Y

• Orlando, Jacksonville,

Tampa, and Miami follow

ULI Central Florida | January 13, 2016

ORLANDO AND TAMPA AREAS HAVE MOST MILLENNIAL GROWTH IN THE STATE

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13 47

219

68

134

12 7 10 7 Increase in population aged 20-30 by 2040 (000s) 28 33

Source: BEBR 2015-2040 population estimates (released June 2014)

ULI Central Florida | January 13, 2016

STAGE OF LIFE INFLUENCES MILLENNIAL DEMAND FOR HOUSING

HOUSING NEEDS: 2015 2020 2025 Student Rental Millennials Gen Z / Millennials Gen Z Singles / Roommate Rentals Millennials Millennials Gen Z / Millennials Young Couple Rentals Millennials Millennials Gen Z / Millennials Buy Entry Level Gen X / Millennials Millennials Millennials Buy Upgrade / Move-Up Home Gen X / Baby Boomers Gen X / Baby Boomers / Millennials Millennials / Gen X Buy 2nd 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

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• Today Millennials’ biggest impact is on housing for-rent, that is already changing

towards housing for-sale

Source: RCLCO

ULI Central Florida | January 13, 2016

RENTER MILLENNIALS MORE URBAN THAN MILLENNIAL BUYERS

6 0% 5% 10% 15% 20% 25% 30% 35%

City – near a mix of

• ffices, apartments,

and shops City – mostly residential neighborhood Suburban neighborhood with a mix of houses, shops and businesses Suburban neighborhood with

• nly residential uses

Small town Rural area

Rented Bought

• Young first-time homebuyers are predominantly purchasing their homes in suburban
• r mostly residential locations
• Most popular for both young renters and homebuyers: suburban area with a mix of

uses

• 23% of young homebuyers purchased their home in a single-use suburban

neighborhood

Source: RCLCO 2016 Survey

ULI Central Florida | January 13, 2016

BUILDERS AND STARTER HOMES

• Builders moved away from starter homes in favor of higher prices, bigger

margins…

• Now some shifting back toward homes that Millennials can afford…

– 14% of DR Horton’s revenue is generated by its growing Express brand

• Others (e.g. Pulte) targeting more affluent Millennials who can afford

to live closer-in

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ULI Central Florida | January 13, 2016

REPORTED HOUSING PRICE AMONG FIRST-TIME HOMEBUYERS

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• Homebuyers who purchased a new home tended to pay more than first-time

homebuyers who purchased an existing home

• Among respondents who purchased a new home, 25% of these homes were valued

at under $200,000, compared to 47% of homebuyers who purchased an existing home

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% Below $200K $200K - $300K $300K - $500K $500K - $750K $750K - $1M $1M+ New Existing

Source: RCLCO 2016 Survey

ULI Central Florida | January 13, 2016

BETTER VALUE AND A LARGER SIZE LEAD TREND IN PURCHASING EXISTING HOMES

9 100 200 300 400 500 600 Other Not living around construction Larger lot and mature landscaping Limited or no new homes where we wanted to live More house for the money Better price/value

Why Respondents Chose Existing

Source: RCLCO 2016 Survey

ULI Central Florida | January 13, 2016

BETTER DESIGNS, NEW APPLIANCES, ENERGY EFFICIENCY DRIVE NEW HOME SALES

10 50 100 150 200 250 Other Opportunity to customize More energy efficient All new appliances and warranty Better designs and technology

Why Respondents Chose New

Source: RCLCO 2016 Survey

ULI Central Florida | January 13, 2016

FIRST-TIME HOMEBUYERS STILL SEE OWNERSHIP AS A GOOD INVESTMENT

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• The top reasons that first-time homebuyers gave when asked why they

chose to own included:

2.59 3.42 3.55 3.72 3.73 3.84 3.89 4.00 4.08 4.08 4.28 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 I recently got married and am ready to establish a household with… Owning means my housing costs won’t increase Owning is more prestigious Owning means I can live in a quiet neighborhood with less traffic… Owning means I can live in a better neighborhood Owning means I can have a yard Owning is cheaper than renting I want to build equity through homeownership Owning means I can have a larger space My house will appreciate in value and I will earn a return on my… Owning allows me more control over my space and to make…

Source: RCLCO 2016 Survey

• Building Equity
• Getting a Future Return on

Investment

• Having More Space
• Having Control Over Space

RCLCO 964 Lake Baldwin Lane Suite 100 Orlando, FL 32814 Phone: (407) 516-4999 Fax: (407) 515-6599 www.rclco.com Gregg Logan Managing Director Phone: (407) 516-4999 glogan@rclco.com