The Reality that People Don’t Want to Talk About

Friday, 06 December 2019 14:26 Written by
Things have changed in real estate. In major ways. The first game changing way is how long people are staying in their homes. Economists used to be able to set their watch by the statistic that the average “owner occupied” homeowners move every 7 years. The national average has now shifted to almost 13 years. That’s a big deal. From a volume stand point, that means almost half of the sales that are organic will be happening moving forward in the next decade.

In addition, 34% of “owner occupied” homes are owned by baby boomers. Millions of these homes will hit the market in the next twenty years. There will be more homes available than the Gen X and the Millennials can absorb. What further complicates this equation is a fundamental shift in values in the Millennial generation. From a practical standpoint, they value experience and giving back over possessions and what their parents wanted to achieve at the same age.

For example, they would rather rent a smaller, three-bedroom, apartment with two roommates and be able to take 2/3 “long weekend” excursions to another town with friends and one big overseas trip per year than own a house or car and have to maintain them. Uber, Door Dash and VRBO are a few examples of companies that have made this reality for these potential buyers. Many high school kids are now graduating without a driver’s licenses. Another big generational shift.

Where will this land for the housing market “futures”? As millennials begin to get married (in their late 30’s and 40’s) will they have a desire to purchase, remodel and make the boomers homes attractive again? If interest rates get back to reality instead of being artificially kept low by the Federal Reserve, how does that move the needle?

My gut? I think that as the younger generation gets married and starts their family 10-20 years later than their parents and grandparents did, it will self-correct with a significant drop in values for 3-4 years in between the transition period. This small window may present one of the best real estate acquisition opportunities in the last 70 years. In Denver, it’s possible that the construction defects 7 year window could hit at the same time. If that happens at the same time. That 3-4 year window could add billions to investors net worth.

The most significant thing to be optimistic about is this: In the next 15 years, there will be the largest transfer of wealth to the next generation in the history of our planet. This includes social classes from the lower middle class to the wealthy. This could be THE game changer. I look forward to guiding you through this next 15-20 years and making your family achieve maximum profits moving forward.