NEW DEMOGRAPHICS: WHOS BUYING NOW

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NEW DEMOGRAPHICSWHOS BUYING NOW???

• Frances Martinez Myers

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Its All About the First Time Homebuyer
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WHO ARE THEY???

• Single Women
• Immigrants
• Minority Buyers
• Generation X Y

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Single Women

• Second largest group of homebuyers
• 20 of the market (50 growth in 8 yrs)
• 550 billion in sales volume in 3 yrs
• Make up single mothers, young singles,
  middle-aged divorcees and seniors
• 33 never married

• 50 live alone
• 30 single mothers
• 42 years old
• 36 are minorities
• 66 are first time homebuyers
• 32K-35K median income
• 28 of all households headed by women by 2010

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Single Women

• 15 purchased a condo
• 83 chose a non condo single family unit
• 34 of 2 BR homes (highest share)
• Proximity to friends/family drives location

• Will compromise on size/cost to get attributes
  most important to them
• More likely to use and value a real estate
  professional
• Most likely to recommend professionals to their
  friends

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Future Implications of Single Women

• Showing strong signs of continued growth
  expansion
• Female boomers will outlive their spouses by
  seven years
• Younger women will continue to evolve as
  homebuyers
• Room for growth---30 female-headed households,
  23 homeownership rate, 20 of all recent buyers

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Immigrants

• A nation of immigrants
• 1.2 million new immigrants since 2000
• 62 of foreign born live in five states
• 1990-2000 immigrants living in traditional
  gateway metros fell 5
• 1990-2000 27 emerging gateways rose 5
• 38 gateways are home to 70 of foreign born

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Immigrants

• 25 of children under 10 have foreign born
  parents
• Newly arrived legal immigrants are expected to
  contribute about 3.6 million households over the
  decade
• Significant impact on household growth overall.
• Nearly all of the Northeasts net growth in
  households since 1996 has come from minorities.

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Immigrants

• First time buyers make larger down payments (7
  versus 4 native first time homebuyers)
• Allocate more of their income to housing (For 39
  mortgage consumes 30 of income vs. 28 natives)

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Immigrants Future Implications

• 20 of population (25-34 age group) is now
  foreign born
• Will contribute immensely to household growth in
  the US
• Vital to the industry (14 of recent homebuyers
  and 18 of renters in 2005)
• Expected to hit 12 million between 2005-2015.

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Minorities

• 30 of US population by 2010 and 34 by 2020.
• 66 of household growth over coming decade (14.5
  million 2005-2015)
• Will offset the 3.4 million drop in white
  households
• 1.4 million minority headed households (ages
  40-49) with Hispanics accounting for 1.1 million

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Hispanics

• Largest fastest growing minority group
• Projected purchasing power equal to the third
  largest economy in the hemisphere by 2010.
• 30 household growth (3x rate of rest of
  population)
• 2 million Hispanic owned businesses generating
  350 billion annually
• 50 of all U.S. Hispanic Households earn 50K
• Households earning 75K fastest growing segment

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Hispanics

• Migrating to every region in the country driven
  by job opportunities affordable housing
• Median age 27 vs. 36 of whole population
• 1/3 is under 18
• 72 are US citizens (Birth or naturalization)
• Homeownership rate of 50 (US born Hispanics 60)
• Prefer to communicate in Spanish or to obtain
  bilingual information
• Prefer high touch one-to-one relations with
  trusted advisors
• Prefer homes near relatives, work, schools
• Like homes with space for future growth

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Hispanic Future Implications

• Will fuel first time homebuyer market over the
  next two decades.
• Will dominate future business pipelines
• Will impact REO purchases

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Generational Shifts Rapidly Aging Population

• Population Growth of 26 by 2030
• 10,000 Americans per day will turn 65 starting in
  2012
• Source Bureau of Labor Statistics
• 85 or older population will more than double to
  6.4 million by 2020
• Source U.S. Census Bureau

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Projected Labor Shortages by 2010

• 167 million available U.S. jobs
• 157 million available in the workforce (shortage
  of 10 million workers!)
• Source Human Trends Alert
• Nearly 70 of new entrants into the workforce
  will be women, minorities, immigrants
• Source Worldwide ERC

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Ratio of Replacement Workers to Retirees Dropping

• 91 in 1944
• 41 in 1995
• 21 in 2025 (projected)

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Generation X

• Born between 1965 and 1979
• lack of trust in leadership, particularly
  institutional leadership
• Rampant political apathy
• Increase in mothers in the workplace
• Concerns on environmental destruction and
  ecological issues
• Inception of the Internet
• The end of the Cold War

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Gen Ys Different than the Boomersand Gen X

• Born between 1980 and 1994
• Gen Y-ers are becoming engaged parents
  embarking on careers
• Previously stereotyped as rebellious slackers
• Key traits
• More ambitious than boomers/Gen X
• Very brand oriented
• More focused on their family
• Tend to move jobs more often
• Over half are children of divorce
• Are more peer-oriented
• Place a premium on workplace culture

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Gen Y and Technology (College Students)

• 97 own a computer
• 94 own a cell phone
• 76 use Instant Messaging
• 15 of IM users are logged on 24 hours a day/7
  days a week
• 34 use websites as their primary source of news
• 28 author a blog and 44 read blogs
• 49 download music using peer-to-peer file
  sharing
• 75 of college students have a Facebook account
• 60 own some type of portable music and/or video
  device such as an iPod
• Source Connecting to the Net.Generation 2007

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Communicating with Gen Y

• Not comfortable with communicating on the phone
• Dont verbalize their needs well
• Prefer to state their needs/requirements online
  or texting
• Used to and comfortable with establishing and
  maintaining friends and social relationships
  online

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Impact on the Workplace
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Gen Y Different Values

• Very tuned into their value on the job market
• Limited loyalty to any particular employer
• Insist on working in a stimulating job environment

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The Gen Y View The Point of Work is to Create
Leisure

• Want jobs that provide
• Flexible work schedules
• Telecommuting options
• Ability to work part-time
• Able to leave the workforce temporarily to handle
  family issues

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Dual Income Households Dropping

• More mothers or fathers now choose to stay at
  home rather than work
• 22 of Gen-X Y mothers not employed, versus 14
  of Boomer mothers
• Source Roper Report 2006

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Real Estate and Generation X Y
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First Homes Reasons for Buying

• BABY BOOMERS
• Average age first time buy 29
• Purchase typically based on life event (e.g.
  marriage/baby)
• Key Driver safe investment
• Spend on average 21 of HH income
• Source Century 21 survey

• GENERATION X/Y
• Average age first time buy 26
• Purchase based on appreciation value
• Key driver Family reasons
• Spend on average 25 of HH income

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Key Concerns In Buying

• BABY BOOMERS
• Price 51
• Proximity to work 4
• Length of time to buy first home 4.3 months
• Source Century 21 survey

• GENERATION X/Y
• Price 39
• Proximity to work 10
• Length of time to buy first home 5.4 months

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Generation Y Buyers

• Do not typically prefer a hot suburb like their
  boomer parents
• Do not limit themselves to major metros
• More likely to prefer urban infill locations/high
  rises
• Want to live in culturally diverse neighborhoods
• Gravitating to second and third tier cities with
  strong entertainment and recreational amenities
• Source Urban Land Institute

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Generation Y Buyers

• More likely to be attracted towards designs that
  emphasize
• Bright, open spaces
• Plenty of windows
• Flexible use of rooms and spaces
• Wireless Internet is indispensable
• More inclined/attracted to urban life
• Source Urban Land Institute

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Is there still money out there??

• YES!!!

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Available Financing

• FHA recent overhaul makes it attractive
• Citi Mortgage 97 mortgage with closing cost
  assistance. Also providing grants to revitalize
  12 communities distressed by foreclosures
• Countrywide still offering 1st time buyer
  products
• Federal Home Loan Bank of San Francisco
• Interest rates still low

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We might be ignoring them because

• They take too much time
• Low Price Point
• Lower GCI
• I dont understand them
• Until recently lack of affordable housing

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Turning Lemons into Lemonade

• Highest inventory in years
• REO properties flooding the market
• Builders unloading inventory
• Auctions

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Why should I care?

• This collective group represents significantly
  over 50 of the market
• Pipeline
• Boomers are making the last few purchases
• Could you use the money????

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Sources

• NAR
• Harvard Joint Center for Housing Studies, Buying
  for Themselves An Analysis of Unmarried Female
  Homebuyers, June 2006
• US Census Bureau
• Hispanic Market Weekly