Williamsburg, James City County, York County, New Kent County, Norfolk, Newport News, Hampton, Richmond, Charles City County, Tidewater, Northern Neck, Gloucester, Hampton Roads and Central Virginia
Baby and Echo Boomers: How Generational Trends Affect the Real Estate Market

Baby and Echo Boomers: How Generational Trends Affect the Real Estate Market

Click to Print

Elaine VonCannon, ABR, SRES, Associate Broker, Notary Public, Team Manager

As the United States economy reaches the end of the first quarter of 2006the real estate market has proven to be successful, despite a slowdown at the close of 2005. As experts predicted, what appeared to some as a bursting market bubble, is really a simple correction that has restored balance between home buyers and sellers. According to Realty Times writer Kenneth Harney, OFHEO chief economist Patrick Lawler stated, "despite recent indications that a slowdown may be forthcoming, house price appreciation during 2005 continued to hover at near-record levels." "While deceleration continues in some areas," Lawler continued, "appreciation generally is still extremely strong." Harney also reported that the Office of Federal Housing Enterprise Oversight (OFHEO) "found that the average American house gained nearly 13 percent in value between the end of 2004 and the end of 2005." "Home building and mortgage industry economists suggested that one reason for the continuing high appreciation rates may be exceptionally high demand tied in with demographic factors," writes Harney. These demographic factors are often associated with generational buying trends. David Lereah, chief economist for the NAR, also believes that other strong sectors of the economy such as US exports, construction activity and overseas economies will keep the housing industry moving forward.

Growing Up In the 80's and 90's

The Echo Boomers are the second largest generation in the United States, second only to their parents. Children of the Baby Boomers, Echo Boomers are the only generation to come of age with the technology of the twenty-first century. They are very different from their predecessors and are more willing to take risks. Their parents, Baby Boomers, were the first generation to have two income households, multiple careers and a 50% divorce rate. Most Echo Boomers were born between 1977 and 1995. They have more lending and mortgage options and purchase larger, more expensive homes at earlier ages. Currently, the average American has three major career shifts in life. Echo Boomers are more likely to be investors, unlike their grandparents, who lived in the same home until retirement. Echo Boomers often receive financial assistance from their parents when purchasing property. According to the article "Understanding Generational Difference in Home Remodeling Behavior" published by the Joint Center for Housing Studies of Harvard University, Echo Boomers are also more likely to remodel their homes with do-it-yourself solutions. In 2005 the average spending for do-it-yourself remodeling was $602.00 for Echo Boomers compared to $587.00 for professional remodeling services.

An Economic Force To Be Reckoned With

Baby Boomers are still making a sizable impact on the economy of the United States, along with their children. These two generations affect the consumer market in almost every industry and marketing is even crafted specifically for them. In Real Estate Weekly last fall, John Heithaus, partner at Certified Closing Network, was quoted as referring to Baby Boomers as "the greatest economic force in the history of the United States." Baby Boomers and Echo Boomers are both major demographic groups affecting the real estate market. The Baby Boomers, raised by parents who survived the great depression, are more cautious. They came of age during the nation's transition from the conventional 1950's to the upheaval of the 60's and 70's; the Baby Boomers are the first generation to live within redefined cultural trends. The Baby Boomers are mostly born between 1945 and 1964 and according to the Joint Center for Housing Studies of Harvard University in 2005 the average spending for do-it-yourself remodeling was between $463 and $643. The average amount invested in professional remodeling services was between $1,588 and $1,686. The Baby Boomers are more likely to trust and hire an expert. They generally make more money than their parents and work to give their children every opportunity to succeed.

The Market Will Continue To Grow

Real Estate Weekly has reported that as Echo Boomers "continue to move into adulthood, they are also suddenly becoming a strong buying and renting force. There are 80 million Echo Boomers in the United States, roughly one third of the population, who currently invest $170 billion in real estate each year." Their buying power, combined with that of their parents is a force that will continue to grow and evolve throughout 2006. Baby Boomers are less affected by rising costs and higher interest rates than other generations and they will pass this stability on to their children. The Echo Boomers will continue their trend of purchasing newly constructed homes and the Baby Boomers will continue buying second homes and planning for retirement. This will keep the real estate market balanced and with steady growth. Next month we will discuss creative financing in the current real estate market, to read more visit http://www.voncannonrealestate.com.