By Mike Sunnucks | Rose Law Group Reporter
Millennials continue to both challenge and offer promise to home builders and the housing industry.
Jim Belfiore, president of Belfiore Real Estate Consulting, said the regional housing market ended 2019 on a strong note and he expects 2020 to start out strong fueled by strong demand and low mortgage interest rates.
“We are all basking in the sun right now,” Belfiore told industry leaders and movers and shakers at his annual event.
The Millennial generation (those born between 1981 and 1996) still drives some obstacles to home buying, according to Elliott Pollack, a veteran economist and CEO of Elliott D. Pollack and Co.
There are more than 7 million young adults between ages 25 and 34 living with their parents, according to federal data.
Pollack also said heavy student loan debt loads also discourage or delay young adults from buying homes. The veteran economist said the cost of higher education and student loans has resulted in a major transfer of wealth to universities and away from other purchases including real estate. Pollack said that dynamic has not always worked out at least economically and financially for some students.
“If you are a Russian Literature or Gender Studies major you are going to be the most educated sales clerk at Macy’s,” Pollack told the more than 900 attendees at Belfiore’s AZ Dealmakers event.
Millennials are also part of a national trend of fewer people moving. The number of Americans moving to a different state has stayed at subdued levels since the last recession, according to the U.S. Census Bureau.
“People aren’t moving. Millennials aren’t moving,” Pollack said.
Still, Arizona is the landing spot for one out of every ten American’s making interstate moves, Pollack said.
The Millennials glass also has a half-full side to it.
Homebuilding executives, as well as Pollack, point out that many Millennials are getting into their 30s and that is a prime homebuying age.
“There is a tsunami of them,” Pollack said.
Sheryl Palmer, who is Chairman and CEO of Scottsdale-based Taylor Morrison Homes, said one-third of the national builder’s homebuyers are Millennials and half of those are buying homes in the move-up price range.
Palmer is more optimistic that on Millennials buying homes including buying in the suburbs. That works against some thinking that younger adults are eschewing homeowners and living in suburbia.
“I think that is a bunch of B.S.,” Palmer said of that contention during a housing panel moderated by Rose Law Group President and Managing Partner Jordan Rose at the AZ Dealmakers event.
Palmer did say Taylor Morrison has seen younger Millennial buyers less focused on school in their purchase in part because younger adults are having children later in life than previous generations. “Millennials are not putting a focus on schools as much,” Palmer said.
Still, homebuilders acknowledge they need to continue to evolve their designs, marketing and offerings to keep up with changes in consumer tastes and preferences.
“Millennials are willing to live in smaller homes,” said Don Murphy, Arizona Division President for Shea Homes.
Roger Gannon, Division President of Woodside Homes, said digital marketing, virtual reality presentations as well as sustainable designs and construction and technology amenities are part of younger and other buyers’ expectations when they are looking at where to live. Gannon said technology, sustainability and digital marketing are part of buying experiences for other purchases and those have bled over into the housing.
“They just expect it,” Gannon said.