Generational Trends – Millenials Change Homeownership Rules . .

. And Licensees

Glenn E. CrellinRunstad Center for Real Estate Studies

University of Washington

ARELLO Annual ConferenceSeptember 21, 2013

Acknowledgments

Principal Sponsors of this research Washington Department of Licensing, Real Estate

Program Realtor® University Research Center

General Sponsors of Runstad Center Research Washington Realtors® Washington State Housing Finance Commission

Generational Trends and Real Estate

Understanding Generations Population Demographics Homebuyer Demographics Licensee Demographics Demographics and Technology Demographics and Education

Identifying Generations G.I. Generation

Born 1900-1924: Age 87+ Silent Generation

Born 1925-1945: Age 66-86 Baby Boom

Born 1946-1964: Age 47-65 Generation X/Baby Bust

Born 1965-1979: Age 32-46 Generation Y/Millennials/Echo Boom

Born 1980-2000: Age 11-31 Generation Z/Internet Generation

Born 2001-present

Age Distribution of Population

13%

28%

20%

26%

11%

2%

Z/InternetY/MillennialX/BustBoomSilentG.I.

Era of Renters?

Media suggests Millennials prefer to rent … forever Mobility Part-time jobs Fear of ownership Student debt Urban lifestyle

Hasty Generalization

Historical Context

Mankiw and Weil, Regional Science and Urban Economics, 1989 “The entry of the Baby Boom generation into its

house-buying years is found to be the major cause of the increase in real housing prices in the 1970s. Since the Baby Bust generation is now entering its house-buying years, housing demand will grow more slowly in the 1990s than in any time in the past 40 years. If the historical relation between housing demand and housing prices continues into the future, real housing prices will fall substantially over the next two decades.”

Recent U.S. Homeownership Rates

19821984

19861988

19901992

19941996

19982000

20022004

20062008

20102012

35

40

45

50

55

60

65

70

All Under 35

%

Homeownership Rate by Age of Householder

1982 1992 2002 20120

10

20

30

40

50

60

70

80

90

<3535-4445-5455-6465+

%

Homeownership Rate by Age Group(Percent)

<25 25-34 35-44 45-54 55-64 65-74 75-84 85+

1960 12.5 46.2 54.5 48.4 46.4

1970 13.8 45.6 66.1 69.9 61.4

1980 18.1 50.2 70.8 46.9 69.3

1990 17.1 45.3 66.2 75.3 79.7 78.8 70.4

2000 17.9 45.6 66.2 74.9 79.8 81.3 77.3 66.1

2010 16.1 42.0 62.3 71.5 77.3 80.2 77.9 66.2

GI Silent Boom X/Bust Y/Millennial

Profile of Washington Home Buyers 2010

19.6%

23%

17%

20%

14%

7.2%Age

<3030-3940-4950-5960-6970+

Future Housing Plans

Silent Boom Bust Millennial0%

10%20%30%40%50%60%70%80%90%

100%

Current Renters

Rent Buy Don't Know

Silent Boom Bust Millennial0%

10%20%30%40%50%60%70%80%90%

100%

Current Owners

Own Rent Don't Know

Generational Composition of Workforce

Adult Licensee0%

10%20%30%40%50%60%70%80%90%

100%

MillennialBustBoomSilent/GI

Technology is Innate

Usage of Social Media for Business

Early Boom Late Boom Early Bust Late Bust Millennial0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Licensee Advertising on Craigslist.org

Early Boom Late Boom Early Bust Late Bust0

10

20

30

40

50

60

70

80

Perc

ent

Real Estate Has Low Education Entry Barrier, But…

Adults

Licensees

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

HSSome College2-year4-yearGrad School

Education by Generational Cohort of Licensees

Early Boom Late Boom Early Bust Late Bust Millennial0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Grad SchoolBachelor'sAssociate'sSome CollegeHS

Preferred Delivery of Continuing Education

Early Boom Late Boom Early Bust Late Bust0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

OtherInternetLecture