Demographic Lifestyles and Buying Power

As time marches on they’ll move the Baby Boomers aside as target real estate buyers of resort property …

Resort Vacation Home
Will the majority of retirement age baby boomers move to remote resort locations like Mammoth Lakes, Dillon, Colorado or in recreational areas like Lake Tahoe?

Part Two in a 4-part Series evaluating real estate and consumer predictions as generations transition throughout successive life stages.

Part One: Determinism

For each of the following predictions more current forces may delay and extend the age ranges for the Millennial generation.

But first, what about the Gen X generation?

They “occupy” several life stage demographic profiles.

Recall that the Gen X cohort accounts for roughly 51 million who were born between 1964 and 1980.

By 2015 they range from between age 35 and 50 years old which stretches across

Active Midlife Couples
  • 30-44 year old Singles and Midlife
  • 35-54 year old Families
  • 45+ year old Families and Empty Nest Couples.

They have or are just now reaching their “peak spending years,” between the ages 46 and 53. Dent correlates demographic age to real estate segments.

Spending on trade-up homes accelerates from age 35 and reaches a peak by around age 44.

As time marches on they’ll move the Baby Boomers aside as target real estate buyers of resort property …

Sales of vacation property begins to accelerate from age 46 and peaks around age 52 to 55.

The Baby Boom generation conformed except for those members caught by surprise during the Great Recession.

Investment in retirement property begins to accelerate from the late 50s and peaks in the mid-60s.

In 2014 the huge generation numbered 75.4 million.

Born after World War II between 1946 to 1964, their median age 60 years old anchored their range between 51 and 69 years old.

Having moved through all of the other life stage and age segments they now occupy

Retiring Baby Boomer Couples
  • 55+ Baby Boomer Couples,
  • Empty Nests, and
  • 65+ Couples and Seniors

In addition, Dent describes how broad geographical migration patterns significantly influence long-term real estate trends.

Certain areas of the country clearly and consistently have experienced faster growth than others. 

For example in 2002 …

The Northeast and the Upper Midwest Plains states have generally been losing population; the Midwest has seen flat or modest growth; and the Southeast, Southwest and Northwest have all been growing substantially.

Will the majority of retirement age baby boomers move to remote resort locations like Mammoth Lakes, Dillon, Colorado or in recreational areas like Lake Tahoe?

No.

Part Three: Who’s Free to Move About the Country?

Steps:

(19) Anticipate the growing shifts in life and business. Nobody wants to swim upstream if the current is moving everything in the opposite direction. Clue your fans in.

An excerpt from Book Five in “The Knowledge Path Series” dedicated to helping you find the place of your dreams in the Sierra Mountain resorts.

Determinism

Psychologists have found that midlife is typically a time when many of us take stock of our values and goals. 

Resort Investments
Predictable Real Estate and Consumer Trends as Generations Change Aging through Life Stages.

Part One in a 4-part Series evaluating real estate and consumer predictions as generations transition throughout successive life stages.

Fifteen years ago in 2002, as Mammoth Lakes realtor Paul Oster reminded us, Harry Dent built several real estate scenarios on shifting demographics called “Age Demographics, Buying Cycles and Real Estate Appreciation”.

And years earlier management guru Peter Drucker wrote about how dismal most predictions turn out, except for one type.

Those based on fundamental demographics.

If I remember correctly he coined the phrase “Demographic Determinism”.

Dent said as a new generation enters the workforce around age 20, we can expect commercial real estate to boom.

20-Somethings in the Labor Force

But, why?

The influx of new workers stimulates demand for office space and manufacturing facilities. 

Since these new workers are also consumers, there is increased demand for new stores and shopping malls.

Of course Amazon, losing money quarter after quarter in 2002, had only just begun to exercise its disruptive influence over traditional retailing.

Why Go to the Mall?

And the older Millennials coming of age in high school may have remembered a time when Amazon didn’t exist, but their younger brothers and sisters act as if they didn’t.

But as a rule of thumb, when it comes to residential housing you can identify five age-specific buying cycles.

Over the life span of a generation, spending on each category accelerates to peak at predictable age intervals.

When an entire generation goes through such predictable property spending patterns, we get a macroeconomic view of the wave-like fluctuations in real estate demand.

As a result, investors can know years and even decades in advance what kinds of properties are going to be hot and when. 

For example, someone who is 52, a “youngish Baby Boomer” or “oldish Gen Xer,” and at the peak of his earnings doesn’t typically rent a one-or two-bedroom apartment for himself—though he might rent one for his 24-year old daughter.

Dream Vacation Home

Instead, he’s thinking about what kind of vacation home he wants or, if he’s already purchased it, how to transition to retirement in 10 years or so.

But, his daughter, just now transitioning from school-to-work, represents the median age for the Millennial generation.

In 2015 we already know her generation ranges in ages from 18 to 35.

They will be segmented into at least six life stage lifestyles.

  • 20-29 Year Old Singles
  • 20-44 Year Old Families
  • 25-54 Year Old Singles and Families
  • 30-44 Year Old Singles and Couples.

What’s their impact on apartments and retail shops?

The demand for rental apartments and retail space including shopping centers, begins to accelerate from 19 and peaks around age 26.

Here’s where the rules of thumb may need to hitch hike down the road for a few years.

Demand for Family Starter Homes

Starter home purchases begins accelerating at around age 26 and reaches a peak around age 33.

Oops.

Maybe, something else is going on, as we track Millennials through time.

Part Two: Demographic Lifestyles and Buying Power

Steps:

(19) Anticipate the growing shifts in life and business. Nobody wants to swim upstream if the current is moving everything in the opposite direction. Clue your fans in.

An excerpt from Book Five in “The Knowledge Path Series” dedicated to helping you find the place of your dreams in the Sierra Mountain resorts.