Category: Media

The Next Great Housing Explosion?—Part 2

An army of consumer power, known as the Millennials, is headed our way and poised to rock our economy in an historic way.

Last week we talked about their size and strength. Now let’s talk about their ethnic blend and what they’ll demand from the housing market. This new “Boom” will look much different than the one in the 70’s – 2005. The country is becoming more of a “Rainbow” society. By 2024, according to the Mortgage Banking Association (MBA), the following will occur in household growth in the US.

Hispanics             5.7 Million

Non-Hispanic White      5.0 Million

Black                    2.4 Million

Asian                    1.9 Million

The ethnic blend will change three main characteristics from the “Boomers”.

  1. Size of home – words like simplify, efficient, economic replace, bigger, opulent & lavish. Millennials are satisfied with the smaller home footprint.
  2. Cost of home – while the affordability index is at the lowest levels since 1992, the mindset if conservative and flexible when it comes to the monthly obligation. The old question of “what do I qualify for?” has changed to, “I can afford X”.
  3. Location – proximity to shopping and transportation is much more important to this group. Long commutes no longer are a tradeoff for that home in the country.

We are poised to see a housing boom that will in all likelihood exceed what the market did during the “Baby Boomer” generation. What does this all point to? Have you heard the phrase “35 is the new 25”? That is true about the “Millennials”! So buckle up, the next ten years will be a decade to remember in the housing industry!

The Next Great Housing Explosion?—Part 1

What comes to mind when you think of Millennials?

Urban hipsters in their 20’s, dwelling in gentrified neighborhoods, cycling to work, sipping expensive (and environmentally friendly) coffee, unafraid to jump from job to job?

That’s the popular snapshot of Millennials, but they’re much more diversified–and bigger–than that. A millennial is someone  born between 1981 and 1997, (between 18-34 years old). They’re 75,300,000 strong, bumping Baby Boomers at 74,900,000 (between 51-69 years old and born between 1946 and 1964).

With an army of consumer power like that, Millennials are poised to impact our economy in an historic way. Especially the housing industry. Consider these facts:

  1. Millennials are the largest demographic to ever enter the housing market.
  2. One out of three households that moved over the last two years were Millennials.
  3. 8 million Households will be headed by Millennials in 2018.
  4. 70 percent of Millennials anticipate owning a home by 2020.
  5. By 2024, nearly 16 thousand new households will be created.
  6. By 2014 there will be 20 Million more people, age 60 and over than there are today and 18 million more people age 18-44, all driven by the Millennial explosion.

Contrary to what most people believe, a robust housing market is not driven by interest rates. It’s fueled by a growing job market and new family formations. And increasingly, Millennials are replacing their urban chic with the “burbs”. As Baby Boomers downsize, Millennials are starting to form families and enter the housing market. Yep, even the Millennials are starting to drive minivans (I can’t wait to see my son driving around in one).

Next week, I’ll tell you about the surprising “look” of the new Boomers, and what they’ll demand from the housing market.

Bendafornia: The Great Northern California Migration to Bend

Sounding like a travel agent here, but in Bend, Oregon you really can ski down a volcano in the morning, ride your bike back to town late morning, then paddle board down a river in the afternoon–and still have plenty of daylight left for adventure. They even have a name for it: the Pole, Pedal, Paddle (PPP).

But the city’s accessible beauty is just one of the reasons more and more folks are visiting Bend—then staying.

I call it Bendafornia. A huge migration from Northern California has contributed to the almost 16 percent growth on average per year since 1990. An improved real estate market in the Golden State, active baby boomers looking for the next big adventure, and a bustling job market in Oregon are all driving the numbers.

Home values in California far exceed most areas of the country
That’s especially true in the Bay Area. As of June 15, 2015, the average home sale price in San Francisco is $833,000 versus Bend, Oregon at $293,000. A difference of $540,000! A lot of smart Bay area residents are doing their math, selling their homes paying cash for a nice place in Bend–and grinning over the $247,000 still in the bank.

Baby Boomers On The Go
Another driver of growth is the aging Baby Boomer population. According to Bend Chamber of Commerce President Tim Casey, over 40 percent of the population growth in Deschutes County is people 65 and older. “For those looking to save money and spend their golden years in the great outdoors, there’s no better place to move to.”

Jobs and Lifestyle
Jobs are the primary engine for driving growth, and in 2014, Oregon was the top destination state in the country, according to a survey conducted by United Van Lines.

Damon Runberg, Bend’s Regional Economist cites a Portland State University study that found Deschutes County was the fastest growing county in Oregon in 2014. In Deschutes County, the unemployment rate is 6 percent, while the State of California’s unemployment rate is 7.7 percent.

Many people who make the move are launching their own businesses. Bend is the sixteenth largest metro area in the country for high-tech startup density. Pretty amazing for a town with fewer than 100,000 people!

Bend–Boom or Bust?
A healthy housing market is always the foundation for future economic growth and all the signals indicate the boom for Bend, and really all of Deschutes County, is not over. The city is now the top inbound county in the top inbound state, with affordable real estate values, dynamic job growth, low vacancy rates, and that joie de vivre—PPP-style!

For an expanded version of this column, please go to my guest column at Oregon Business Magazine:

Partner with Skyline Home Loans NW to Help Our Veterans!

More than 1 million men and women serve in the US armed forces. Many of them need emergency assistance with housing, jobs and medical needs. Find out how you can do a few pushups or buy real military boots to help.

Two family fun events–in Portland and Boise–will raise money for our veterans and active service men and women. See flyer below. Here are other ways you can help:

Boot Campaign_events_NW