BOOMERS AND MILLENNIALS–ECONOMICS OF QUALITY LIFE
32:Look around greater Fort Lauderdale, and you’ll see neighborhoods teeming with baby boomers and millennials, real estate buyers in search of a common attribute: quality of life. It should be no surprise in a community known across the globe as a lifestyle destination. From fun in the sun to moderate winters to some of the finest cultural amenities anywhere, “quality of life” is abundant across Broward County.
Take your pick: from waterfront cities like Fort Lauderdale and Pompano Beach, to desirable neighborhoods like Coral Ridge, Imperial Point, and Coral Ridge Isles, to those finding new favor, like Oakland Park, , and Wilton Manors, The Gary Lanham Group at Coldwell Banker Fort Lauderdale Beach Office has worked with countless buyers from boomers to millennials to find their next home in the right neighborhood.
Together, we match their interests with the market’s offerings. But how do economic realities and personal preferences come together to create the perfect home-buying match in the right market climate? The economy and real estate go hand in hand with quality of life.
MATCHING HOME BUYING STATS WITH ECONOMICS
It’s undeniable that the economics of any real estate market drives a buyer’s and seller’s unique situation. Consumers from baby boomers to millennials, also known as “Generation X,” all are affected by home buying trends. In fact, the top South Florida home buyers each must navigate market realities to get the right home available to meet for their home-buying dollar.
For example, when the economy gets rocky, interest rates tend to drop as a way for the Federal Reserve Bank to help stave off further market instability. Lower interest rates often translate to more borrowing, which leads to more investment and infusions of liquidity into the marketplace.
The real estate market can be a reflection of these macro-economic realities. Take a look at recent events. Since the “great recession,” years of low interest rates have led to continued market growth. Some would say we’ve had a boom economy. It’s certainly apparent in Fort Lauderdale. Construction cranes pierce the sky across the U.S. 1 / Federal Highway corridor, with commercial offices and luxury rental apartments alike rising from the ground.
It’s also clear in the region’s residential real estate and home buying market. Inventory has been low with home buyers buying up available properties. Florida still is attracting almost 1,000 new residents a day, many of whom are fleeing high-tax climates up north. With the new tax law, many find themselves unable to deduct real estate taxes and interest as they once could.
Unemployment is at historic lows. Employers cannot find enough suitable workers to fill their payroll. This is been boom times for many sectors of the U.S. economy and many regions of the country, including Fort Lauderdale.
But there’s a flip side to this coin. Companies are failing. Payless shoes recently announced its closing. Gap, Family Dollar, Toys-R-Us, and numerous other retailers have announced large-scale store closings or the shuttering of the entire chain.
ECONOMY STEERS PRESIDENTIAL POLICY–AND REAL ESTATE
So unemployment is low, but ominous signs are emerging on the horizon. So, how does the economy affect real estate? We have an interesting economic situation unfolding that could throw some concern into economic markets. When markets are questioned, housing is always impacted. And when housing is impacted, and the President of the United States built his career in real estate, it’s likely a push will arise to drive interest rates lower.
You’ve already seen this. President Trump has called for the Federal Reserve to cease interest rate hikes so as to keep money available and limit the impact on the housing and greater real estate market.
To be sure, we’re nowhere near collapse. But when you see the Federal Reserve openly questioning interest rates policy, and the president’s interest has been piqued, now is the time to get those mortgage loan applications in. If you’re a home buyer shopping a Fort Lauderdale property typically priced at or near $350,000 or lower, every quarter point on your home mortgage can mean thousands of dollars spent – or saved – on interest alone.
This affects millennial home buyers and baby boomer home buyers alike. Maybe this is a good time to revisit just who these buyers are. As we’ve written before, the largest cohort among today’s real estate buyer market are young people. Almost half – 45% - of buyers in 2019 will be millennials. Also known as Generation Y, these are Americans born between 1981 and 1996. This year, they range from 22 to 37 years old. By our research, the median age among millennial buyers is 29.
The second-largest cohort, which was only recently overtaken by the millennials, is the baby boomer population. Boomers are the generation born immediately after World War II.
Born between 1946 and 1964, these 54- to 72-year-olds – and the families they were born into – fueled the post-war American economy. Today, the boomers are winding down and reaching retirement age. In fact, some 10,000 are retiring daily. And many of those are among the 1,000 arriving daily into Florida, not only to escape higher taxes up north, but to take advantage of our lower temperatures.
A THIRD CLASS OF HOME BUYER: EXAMINING THE ECONOMY AND REAL ESTATE
We’ve discussed how millennials and baby boomers are large cohorts of home buyers. But in markets like Fort Lauderdale and South Florida, where vacationers are bountiful and continue to drive the marketplace, a third buyer group emerges: the vacation home buyer. Some baby boomers aren’t quite ready for retirement, and have the means to escape the northern cold at least part of the year.
These boomers, likely in the late 50s and 60s, are working, but are preparing for a life of retirement or semi-retirement. They are going to be as much a market driver as they were generations ago when the drove the post-war economy to unparalleled boom times.
Many were raised in northern climates where industrial jobs of the era drew their parents. It was cold, but they were young and spry. Now, these boomers are aging. Even if they’re not quite ready for retirement, they’ve grown tired of winters. They’ve been shoveling snow, commuting to jobs downtown, living amid unbearable cold for months on end. It’s no place for a sexagenarian, or someone in his or her 60s.
This is no epiphany. Here in South Florida, we’re surrounded by neighbors from New York or Washington, D.C., or Chicago, even Richmond, Virginia, where I’m from. They seek a warmer climate where they can enjoy sports, like tennis, swimming, or golf. Or they just want to be outside and enjoying life.
They’ve paid their dues in Corporate America and it’s time to enjoy the life that Florida has to offer. While some of these boomers are relocating to Florida full-time, some are seeking those vacation homes.
GREATER FORT LAUDERDALE: “LIFE. LESS TAXING.”
So, what do the economy and real estate have in common here? As we’ve noted, Florida is a no-tax state. That’s highly alluring to retirees and others fleeing higher-tax states. It’s also attractive to executives and companies looking to relocate here. Like the people at the Broward County’s economic development organization, the Greater Fort Lauderdale Alliance, like to say, Greater Fort Lauderdale offers, “Life. Less Taxing.”
For people preparing to retire, a no-tax environment makes their investments and savings last that much longer. Some also seek to turn their financial holdings into a real estate portfolio. Though it was more than a decade ago, the “Great Recession” decimated many investors’ 401(k) holdings and other investments. If they’re looking to invest what proceeds they may have, as well as a little “sweat equity,” they can buy and manage property for future income. Whether investing in a single-family home, or a duplex or triplex, they can turn that investment into rent proceeds to supplement income that may be stable, or might still be recovering after evaporating during the Great Recession.
What we’ve long seen is that for many people, real estate has always been a leg of success to maintain a high quality of life and standard of living. That’s only growing more common as this savvy buyer thinks toward a more secure future.
Turning real estate into part of an investment portfolio is not just for boomers or retirees. Smart millennials are watching the home buying stats and South Florida’s growth. They’re realizing that Florida’s 1,000 new daily arrivals need homes. These millennials are driving the home buying trends – and becoming top South Florida home buyers.
What we’re seeing is a combination of smart buyers living in a destination that delivers a high quality of life with a long-term play. If you think that play is for you, give us a call.
Gary Lanham Group at Coldwell Banker Fort Lauderdale Beach Office is a boutique real estate organization offering sales, leasing, and brokerage services to the Greater Fort Lauderdale area. A listings agent matches home sellers with buyers and tenants with landlords. While Broward County is our universe, we focus on real estate in Fort Lauderdale, Coral Ridge, Imperial Point, Coral Ridge Isles, Oakland Park, and Pompano Beach. Call us today at 954) 695-6518 or visit www.GaryLanhamGroup.com.
WRITTEN BY GARY LANHAM
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