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Generation Next: The Future of Real Estate

Posted March 10, 2010 by Matthew Denton

Bad economy may dim the chances of better market

They’re not your typical market for first time homebuyers, in fact only few of them would be thinking about buying their own home for the moment. And with the soft economy digging a hole in their pockets, reducing their chances of landing lucrative jobs, and forcing them to live not the life that they were expecting after college, there’s a lot of uncertainty for the Generation Next.

The Milwaukee Wisconsin Journal Sentinel writes, “Generation Next has reached adulthood with nearly 50 million Americans age 18 to 29. Millions more in the generation - roughly marked by those born between 1980 and 2000 - will reach adulthood in the coming years. They’re coming of age in an era of economic pain, with millions of jobs lost and a housing market shattered. They’re delaying marriage, switching jobs (when they can even find one) and dealing with debt. Yet they remain upbeat, a generation that defines itself by technology, music, tolerance, education and clothing, according to a recent Pew Research Center report.”

Looks like we’re going to have some trouble with the real estate market here. Imagine how this can affect the future demand for housing. But the report dismisses any fears of long term property slump. It reasons, “John McIlwain, a senior resident fellow with the Urban Land Institute, says the millennials will be renting ‘far longer than past generations,’ especially since they’ve witnessed the mortgage meltdown. Millions of homeowners now owe more on their mortgages than the residences are worth. Generation Y is at the age of highest new household formation but is instead living in their parents’ basement, have doubled and tripled up, or gone back to school to weather the storm,’ he writes. But the generation will get on its feet economically, find jobs and establish homes. Rentals will be one major way to go in the short and medium term. In the longer term, the generation will be looking to settle down and buy homes.’”
So are you worried? For some reason, the rental sector can benefit from a sagging economy. This is where I’m worried about housing sales but I’m not anxious in the long run. Besides, the House just approved a $15 billion budget to spur job creation to businesses that hire workers. I can see the government giving a worthy try on this plan. I believe in the property cycle. We’re coming full circle and there’s no way to go but up.

Do you agree? Write us a comment.

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