Boomers v. Millennials
Picking up the thread… talking about the new slow growth problem that our old slow growth problem has: More homeowners who are slowly growing older and unintentionally impacting the availability and affordability issues that are at the heart of our local housing crisis.
For those who haven’t been paying attention, the demographic shift we’re experiencing looks more like the steadily rising waters of a massive sea change than the oft-invoked rush of a Silver Tsunami. By 2030, 1 in 3 people in Santa Cruz will be older than 65. That’s stunning and whether we’re aware or not, it’s also something that will make finding a home even harder and more expensive in the future.
The first wave of Baby Boomers started hitting retirement age right after the Great Recession. Coincidentally that was also when members of the Millennial Generation (early to mid 30s) were just starting to search for their first homes. And not surprisingly, that’s exactly when the supply side of the market went South. What started in 2013, has now become a chronic, decade-long shortage that keeps pushing prices into the stratosphere.
As more aging Boomers confront the challenges of downsizing within Santa Cruz, they’re also facing an unexpected irony: Millennials looking for their first homes are competing head-to-head with Boomers searching for their last homes on the exact same listings! The result is more multiple offers and overbids and a market that’s more expensive for all…
Ask a Boomer or a Millennial buyer to describe what they’re looking for and odds are they’ll describe the same house: “Single level, 3 bedrooms, 2 baths, extra office space, 1600-2000 sq ft, nicely remodeled, private yard, quiet street, all within easy walking distance to the ocean. And…..oh yeah, ideally we don’t want to pay more than $1.2 million.”
Here’s a Pop Quiz: Out of all the neighborhoods in SC County how many are likely to see a future listing that matches that description? The answer is NONE! It’s a Unicorn. There are very few, if any, in existence and even if one were to become available…you couldn’t buy it for anything close to $1.2 million.
This new, ultra-low inventory market is different from anything we’ve ever seen. In the years leading up to the Great Recession, younger move-up buyers made up the lion’s share of the market. As they transitioned from smaller places to their next, bigger ones, their natural progression up the ladder of homeownership created a steady turn-over of supply and flow of transactions. But these days, move-up buyers are conspicuously absent and offers contingent on the sale of another property are long gone.
Next Week: Where have all those move-up buyers gone?