Good morning Marin Realtors!
Those of you that attended our General Membership meeting last Tuesday were informed and entertained by two excellent presentations, one by Steve Dickason on the Marin marketplace and Carole Rodoni’s keynote presentation on the Bay Area and national outlook. We had a record turnout! A few of you were not able to get in, as the event sold out. The best way ensure your spot in the future is to get these events on your calendar early and register online.
My key takeaways from Steve were that December was great, last year was obviously great, but we are short on inventory going into the new year, a situation we found ourselves in for most of last year. If the market had continued along its long-term trend line, minus the ups, downs and ups of the last decade, Marin’s prices are approaching where they historically should be.
Carole was quite bullish on the next 3-5 years. If we think the residential market was hot last year in Marin, Carole informed us that Palo Alto was up 40% in the last year! Amazing. Carole described the newly affluent class of late 20s and early 30s buyers driving the market in the City and on the peninsula. Carole describes these “Young Affluent Buyers, 25-35 years old” as 28% of the market Bay Area-wide.
As I mentioned last week, these “Millennial” buyers are a huge and emerging demographic. At the CAR meetings in October, I attended a panel discussion called “Understanding Today’s Consumer: The Impact of Demographic Trends.”
The discussion kicked off with Riva Froymovich, a business writer from New York, self-described Millennial and aspiring home buyer who currently happens to live at home with her parents as she saves for her first house.
She was asked “What do Millennials want, and do they want to own real estate?”
- Millennials want to own real estate
- Millennials want density
- Millennials want quality of construction and design over size of house
- Millennials like to work
- Millennials want to communicate “their way” (text, etc)
The two professors (Dr. Dowell Meyers, a professor of policy, planning and demography at USC and Dr. Susan Brown, associate professor at the Sociology School at UC Irvine) then chimed in on the Millennials. They are coming of age in the most volatile home-buying environment for young people since World War II. Meyers described it as “the Big Pause” for this generation. They are waiting to see what happens on the other side of the Great Recession. What will be the “new normal?”
This is a great question. Generally at this point in a recovery from a recession, 50% of the home buying market is first time homebuyers. Right now in California, it’s 33%.
Dr. Meyers said the low first-time-buyer proportion makes perfect sense. In California, people don’t get married and buy houses until their 30s. Millennials mostly aren’t 30 yet. This huge generation of first time buyers just isn’t old enough yet.
Dr. Meyers said that “coming out of the recession, demography is on our side” as it relates to the real estate industry in California.
The panel generally agreed that these new Millennial buyers need and want more housing units geared toward non-traditional living arrangements. Flexible units. Mother-in-law suite. Places that people can afford. As for this type of housing, “Builders are ready to build, but neighbors are not supporting them at the planning and zoning offices.”
That sounds a lot like the housing discussions we are having right now in Marin County.
The panel concluded with the overall statement that “there is a lot of rebound ready to happen” as this new generation comes of age. For me, this was all very refreshing. I’ve heard many times in the past few years that the next generation of Americans just doesn’t view home ownership at the same priority level that previous generations do. These scholars didn’t see it that way at all.
Later in the conference, CAR Chief Economist Leslie Appleton-Young told us that the biggest market opportunity in 2014 is with the Millennials and first-time buyers.
The rest of the CAR Director team and I are off to the CAR Winter Meetings next week, and we will report back on the important info and data that we gather.
Blaine
