Austin, Texas–based marketing consultant Tim Smith writes about Gen Y and other economic topics for his Echo Boom Bomb blog. Here, he talks to Multifamily Executive about why this generation is changing the face of the housing market and how developers can accommodate them.
MFE: How are Millennials influencing the housing market right now?
Smith: When I studied Echo Boomers, I found some of them are in a position to buy homes. You were probably looking at 13 percent to 20 percent in 2010 to 2011 who were in a position to buy homes, out of approximately 80 million Echo Boomers. At most, that was 16 million homeowners. While working for Wells Fargo, I found that approximately 27 percent were living with relatives over the same time frame, so approximately 60 percent were renting. Echo Boomers rent in creative ways: For example, they might be living with nine other roommates or renting out a room in a house or apartment, depending on their financial circumstances.
MFE: What can multifamily developers do to attract Gen Y renters?
Smith: The thing I would keep in mind is to build apartments and housing near social businesses, like coffee shops and restaurants. These areas attract many young people, and some of them even work in these locations. By doing this, you do two things: save young people money in terms of transportation, and save them time. A few real estate developers did this in Lubbock, Texas, near Texas Tech, saving college students—who are often the most financially restricted—a lot of money. But this also helped attract other Echo Boomers who didn’t attend Texas Tech.
MFE: Is it more economical for Gen Y to rent or own a home?
Smith: It really depends on their circumstances. Homes in Texas cost much less compared with homes on either coast. With all the maintenance time and cost involved in owning a home, the property taxes, insurance costs (rental insurance is cheap), and interest on the mortgage, owning a home can be a major, and unnecessary, cost. As far as moving to a cheaper area, an increase in income doesn’t mean that the cost of living remains the same or decreases. Very few places can offer a competitive salary while offering a similar or lower cost of living (Texas being a good example of this relative to New York, California, or Florida).