Millennial Preferences for Residential Real Estate Where are the Millennials Going? A ULI Central Florida “Candid Conversation” Gregg Logan, Managing Director
GEN Y AND BABY BOOMERS LARGEST SEGMENTS IN FLORIDA 2015 Age 100% 0-14 17.0% 19.3% 90% 80% 15-34 25.2% 70% 27.4% Gen Z 60% Gen Y (Millennials) 50% 35-50 Gen X 20.8% 21.1% Baby Boomers 40% Eisenhowers 30% 51-69 24.2% 22.6% 20% 10% 70+ 12.9% 9.5% 0% National Florida Source: U.S. Census Bureau, 2013 American Community Survey, 1 Year Estimates ULI Central Florida | January 13, 2016 2
FLORIDA MILLENNIALS IN URBAN AREAS Percent Millennials Counties - 30% 24% 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 3
ORLANDO AND TAMPA AREAS HAVE MOST MILLENNIAL GROWTH IN THE STATE Increase in population aged 20-30 by 2040 (000s) 7 28 7 10 12 219 134 33 47 68 13 Source: BEBR 2015-2040 population estimates (released June 2014) ULI Central Florida | January 13, 2016 4
STAGE OF LIFE INFLUENCES MILLENNIAL DEMAND FOR HOUSING HOUSING NEEDS: 2015 2020 2025 Student Rental Millennials Gen Z / Millennials Gen Z Singles / Roommate Millennials Millennials Gen Z / Millennials Rentals Young Couple Rentals Millennials Millennials Gen Z / Millennials Buy Entry Level Gen X / Millennials Millennials Millennials Gen X / Gen X / Baby Boomers / Millennials / Buy Upgrade / Move-Up Baby Boomers Gen X Home Millennials Gen X / Gen X / Millennials / Buy 2 nd Home Baby Boomers Baby Boomers Gen X Gen X / Gen X / Buy Empty Nester Home Baby Boomers Baby Boomers Baby Boomers Buy Retirement Housing Baby Boomers / Silents Baby Boomers Baby Boomers • 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 5
RENTER MILLENNIALS MORE URBAN THAN MILLENNIAL BUYERS • Young first-time homebuyers are predominantly purchasing their homes in suburban or 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 35% 30% 25% 20% 15% 10% 5% 0% City – near a mix of City – mostly Suburban Suburban Small town Rural area offices, apartments, residential neighborhood with a neighborhood with and shops neighborhood mix of houses, shops only residential uses and businesses Rented Bought Source: RCLCO 2016 Survey ULI Central Florida | January 13, 2016 6
BUILDERS AND STARTER HOMES • Builders moved away from starter homes in favor of higher prices, bigger margins… o Now some shifting back toward homes that Millennials can afford… – 14% of DR Horton’s revenue is generated by its growing Express brand o Others (e.g. Pulte) targeting more affluent Millennials who can afford to live closer-in ULI Central Florida | January 13, 2016 7
REPORTED HOUSING PRICE AMONG FIRST-TIME HOMEBUYERS • 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 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Below $200K $200K - $300K $300K - $500K $500K - $750K $750K - $1M $1M+ New Existing Source: RCLCO 2016 Survey ULI Central Florida | January 13, 2016 8
BETTER VALUE AND A LARGER SIZE LEAD TREND IN PURCHASING EXISTING HOMES Why Respondents Chose Existing Better price/value More house for the money Limited or no new homes where we wanted to live Larger lot and mature landscaping Not living around construction Other 0 100 200 300 400 500 600 Source: RCLCO 2016 Survey ULI Central Florida | January 13, 2016 9
BETTER DESIGNS, NEW APPLIANCES, ENERGY EFFICIENCY DRIVE NEW HOME SALES Why Respondents Chose New Better designs and technology All new appliances and warranty More energy efficient Opportunity to customize Other 0 50 100 150 200 250 Source: RCLCO 2016 Survey ULI Central Florida | January 13, 2016 10
FIRST-TIME HOMEBUYERS STILL SEE OWNERSHIP AS A GOOD INVESTMENT • The top reasons that first-time homebuyers gave when asked why they chose to own included: o Building Equity o Having More Space o Getting a Future Return on o Having Control Over Space Investment Owning allows me more control over my space and to make… 4.28 My house will appreciate in value and I will earn a return on my… 4.08 Owning means I can have a larger space 4.08 I want to build equity through homeownership 4.00 Owning is cheaper than renting 3.89 Owning means I can have a yard 3.84 Owning means I can live in a better neighborhood 3.73 Owning means I can live in a quiet neighborhood with less traffic… 3.72 Owning is more prestigious 3.55 Owning means my housing costs won’t increase 3.42 I recently got married and am ready to establish a household with… 2.59 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 Source: RCLCO 2016 Survey ULI Central Florida | January 13, 2016 11
Gregg Logan Managing Director Phone: (407) 516-4999 glogan@rclco.com RCLCO 964 Lake Baldwin Lane Suite 100 Orlando, FL 32814 Phone: (407) 516-4999 Fax: (407) 515-6599 www.rclco.com
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