Marketing to

Gen Next

Lawrence Yun, Ph.D.

Senior Economist NAR Midyear Meetings
NATIONAL ASSOCIATION OF Washington, D.C.
May 18, 2007
REALTORS®
Five Generational Groups
to Watch

• Baby Boomers
• Young and Hip
• Retired and Hip
• Immigrants’ Aspirations
• International Vacationers
Million
Live Births in the U.S.
4.5

Baby Boomers
4

3.5

Echo Boomers
Entering 20s
3

2.5

Source: National Center for Health Statistics

Baby Boomers
 U.S. Population Projection
2000 to 2050

milliion
450
400
350
300
250
200 2050
2000
150
100
50
0

Source: U.S. Census

 U.S. Population Growing but Not in
Other Countries
2000 to 2050
milliion
200

150

100 2000
2050

50

Source: U.S. Census, Brugesgroup, The Economist

 U.S. Population Groups

million Baby Boom Echo Boom

90
80
70
60 Pre-boom Baby Bust
50
40
30
20
10
0
1925-1945 1946-1965 1966-1979 1980-2001
Source: National Center for Health Statistics
 Baby Boomers
million

40
35
30
25
20
15
10
5
0
42 to 49 50 to 55 55 to 60
Source: Census
 Household Wealth Accumulation
(2004)

2004
Median Net Worth in $ thousand
$300
$250
$200
$150
$100
$50
$0
Under 35-44 45-54 55-64 65-74 75 and
35 over
Source: Federal Reserve
Aggregate Household Wealth
Net Worth
$ trillion
60

55

50

45

40

35

Source: Federal Reserve

 Vacation Home Sales
In thousand units
2,000

1,000

Source: NAR
Young and Hip
 Homeownership Rate
By Age Groups

%
90
80
70
60
50
40
30
20
10
0
Under 35 35 to 44 45 to 54 55 to 64 65 and over

Source: Census
 Homeownership Rate
Among the Young
(Under 35 years old)

%
45

43

41

39

37

35
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Source: Census
 Single Buyers

25%

20%

15%
2005
10%
2001
5%

0%
Female Male

Source: NAR
 Downtown Resurgence?
– Downtown Population Trending Up (Examples
from 1990 to 2000)
• Houston up 69%
• Seattle 67%
• Chicago 51%
• Denver 51%
• Portland 35%
• Cleveland 32%

– Central cities holding up better than before

• 31 of 50 largest cities lost population in 1970s
• 22 of 50 largest cities lost population in 1980s
• 15 of 50 largest cities lost population in 1990s
 Condo Share of Total Home Sales

15%

10%

5%

0%
1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005

Source: NAR (only existing home sales)

Retired and Hip
 Number of Persons 65+
million
90
80
70.3
70
60 53.7
50
39.7
40 35.0
31.2
30 25.7
20
10
0
1980 1990 2000 2010 2020 2030

Source: Census Bureau

 Homeownership Rate
Among the Retired
(65 and over)

%
85

83

81

79

77

75
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Source: Census
Baby Boomers want to retiree in …
Urban
12%
Rural
33%
Suburb
25%

Small
Town
30%

Source: NAR
 Which of the following statements about
homes and neighborhoods do you agree with?

0% 10% 20% 30% 40% 50% 60% 70%

% that agree with statement

Source: NAR, NAHB

 Where Do Retirees Currently
Live?
% of total population
20 %
19
18 17.6
17
16 15.6 15.3
15 14.7 14.5 14.4 14.3 14.0
14
13 12.4
12
11
10

Source: Census Bureau

 Where Are Retirees Moving To?
(Percent increase in 65+ population from 1990 to 2000)
%
80
71.5
70
59.6
60
50
39.5
40
30.1 28.5
30 26.9 26.3 26.0
20
12.0
10
0

Source: Census Bureau

Immigrants’ Aspirations
 Surging Immigration
million
15

Projected
11.0
10 9.3

7.3

5 4.4
3.3
2.5

0
1950s 1960s 1970s 1980s 1990s 2000s

Source: Census Bureau, NAR Forecast

Foreign-Born Population on the Rise
(1990 vs 2000)

%
70
2000
60
1980
50
40
30

20
10
0

Source: U.S. Census

 Immigrant Contribution to
Overall Population Growth
(2003)
In 1,000s
300 Native contribution
Immigrant contribution

200

100

-100
Source: U.S. Census
 Immigrant Homeownership Rate
Rises over Time
(2000)
90 %
80
70
60
50
40
30
20
10
0

Years in the U.S.

Source: U.S. Census
 Homeownership Rate by
Citizenship Status
80 Higher Rate for New Citizens
70
60
50
40
30
20
10
0
NH White Black Asian/Pacific Islander Hispanic

Noncitizen Naturalized Native

Source: Census, Harvard Joint Center

 Larger Housing Needs for
Hispanic Families
Family households with 5 or more people
(2003)
%
45
40
35
30
25
20
15
10
5
0

Source: U.S. Census

 Las Vegas vs Buffalo
Payroll Employment (in 1000s)

Buffalo Las Vegas

1,000

800

600

400

200

Source: NAR
 Phoenix vs Cleveland
Payroll Employment (in 1000s)
Phoenix Cleveland

2,000

1,500

1,000

500

Source: NAR
 Orlando vs Pittsburgh
Payroll Employment (in 1000s)

Pittsburgh Orlando

1,200
1,000
800
600
400
200
0

Source: NAR
 Minority Homeownership Rates
(2006)

%
80
75.8
75
70
65
59.9
60
55
49.7
50 47.8
45
40
35
30

White Black Hispanic Asian/Other

Source: Census Bureau
 Gains being Made for All Groups
Percentage Point Gain in Homeownership Rate 1996-2006
(% point change)
10
9
8
7
6
5
4
3
2
1
0

White Black Hispanic Asian/Other

 Plenty of Demand Support

Large Wealth Looking for

Million
100 Transfer To Second Homes
Younger Ones
First-time Buyers
75

Trade Up Buyers
50

25

0
Retired Baby Bust Early Echo Recent
Boomers Immigrants Immigrants
 Changing Face of Housing:
Future Homebuyers & Sellers

• During the next

two decades,
minorities will
account for
approximately two-
thirds of
household growth
… and half of all
first-time
homebuyers

Source: Social Science Data Analysis Network; NAR Forecast

 Diversity Shift
White
75%

2000

White
Asian/Other 72%
4%
Hispanic
9%
Black
12%
2010

White

Asian/Other
66% 2020
4% Black
Hispanic 13%
11%

Black
13%
Asian/Other
Source: Harvard Joint Center 8%
Hispanic
13%
 Net Domestic Migration
(2000 to 2006)

Market Net Domestic

Migration
Riverside-San Bernardino-Ontario, CA 474,621
Phoenix-Mesa-Scottsdale, AZ 398,198
Atlanta-Sandy Springs-Marietta, GA 276,915
Las Vegas-Paradise, NV 259,537
Tampa-St. Petersburg-Clearwater, FL 242,033
Orlando-Kissimmee, FL 206,374
Dallas-Fort Worth-Arlington, TX 168,481
Houston-Sugar Land-Baytown, TX 146,090
Charlotte-Gastonia-Concord, NC-SC 139,418
Sacramento--Arden-Arcade--Roseville, CA 127,808
 Total Population Increase
(2000 to 2006)

Market Natural +
International +
Domestic
Atlanta-Sandy Springs-Marietta, GA 890,211
Dallas-Fort Worth-Arlington, TX 842,449
Houston-Sugar Land-Baytown, TX 824,547
Phoenix-Mesa-Scottsdale, AZ 787,306
Riverside-San Bernardino-Ontario, CA 771,314
Los Angeles-Long Beach-Santa Ana, CA 584,510
New York-Northern New Jersey-Long Island 495,154
Washington-Arlington-Alexandria, DC-VA-MD-WV 494,220
Miami-Fort Lauderdale-Miami Beach, FL 455,869
Chicago-Naperville-Joliet, IL-IN-WI 407,133
International Vacationers
 Expanding World Economy

2005 2006
%
15

12

0
U.S. Asia South Eurozone U.K. Eastern World
America Europe
Source: World Bank
 U.S. vs Foreign Currencies
$/Euro $/Pound Weighted Trade Exchange Value Index

2.0

1.8

1.5

1.3

1.0

0.8

Source: Federal Reserve

 International Buyer Trend in the
U.S. … vs. 5 years ago
100%

80%
67%

60%

40%
25%
20%
8%

0%
Increased About the Same Decreased
 Reason for Buying

Vacation 38%

Rental 37%

Work-
17%
related

Don't Know 8%

0% 10% 20% 30% 40%

Source: NAR
 Best Evidence:
Household Wealth Accumulation
(1995 to 2004)

1995 1998 2001 2004

$184,400
$200,000
Median Net Worth

$150,000

$100,000

$4,000
$50,000

$0
Renter Homeowner
Source: Federal Reserve
 Marketing to
Gen Next

Lawrence Yun, Ph.D.

Senior Economist NAR Midyear Meetings
NATIONAL ASSOCIATION OF Washington, D.C.
May 18, 2007
REALTORS®