How Millennials Affect Real Estate
Millennials. Now one of the largest generations in history, Millennials are poised to redefine the economy through sheer numbers. As this generation of 20 to 30-somethings continues to mature into their prime spending years, it is imperative that we understand how their unique perspective and consumer habits will change the ways we buy and sell goods (Amazon) and services (Uber), forcing companies to modify how they do business if they wish to survive into the next generation. Moreover, how may this generation impact you?
First off, what makes a millennial? Google might tell you it is “a person reaching young adulthood in the early 21st century”. Wikipedia will count people born in the “early 80s to the early 2000s” as qualifying for that valuable Facebook ad market.
What is a Millennial to me, myself a Millennial? Well, in this Millennial’s opinion, it is a state of mind. An understanding of world connectedness. Knowledge has never been more accessible to us. My grandparents grew up frugal and appreciative in the great depression, and my parents in unpopular war-times and in fear of impending atomic world destruction. Whereas I had a cell phone my first day of high school, and a myspace page, and AOL let me use the internet for the first time at the age of 12 (my brother and I looked up “snowboard” as our first experience on the line). You see, I grew up in an environment in which the American dream has never seemed quite so achievable. One can make a ridiculously simple website (http://www.milliondollarhomepage.com/), and go from rags go to millions in minutes. That is what a millennial is. And that is the environment millennials grew up in.
So how does this affect the multifamily market? Chet Welch, Senior Manager at Pivotal Tax Solutions shared his expert opinion on the matter:
As the millennial generation begins to venture out of their parent’s basements and into the real world, they represent an attractive demographic for urban multi-family housing. Multi-family housing in major metropolitan areas boasts many benefits that are attractive to the more eco-conscious generation. Urban housing eliminates the need for a personal vehicle, as everything is within walking distance, or easily accessible via public transit. An apartment or condo provides affordability and more flexibility than the traditional single family residence. Additionally, the abundance of nightlife activities surrounding urban centers caters to the socially savvy crowd.
One area already demonstrating the impact of the millennial demographic is the urban real estate market. Atlanta is one area that has seen a significant uptick in demand for urban multi-family space. The influx of demand for urban living space has driven up rental rates in the area. Increasing rental rates will cause an increase in property valuations and ultimately increase property tax liabilities for all tax payers within the County.
It is critical to identify the cause for market trends that impact all of our property valuations and property tax liabilities. Accurately identifying the cause of market swings will determine a taxpayer’s ability to effectively manage and mitigate tax liabilities impacted by those market swings.”
New studies are continually being written about the efforts of cities on the ever-increasing educated, spending, millennial market. Cities planning for this demographic’s financial takeover are the ones who will win big in the coming years.
Compared to its peers, Atlanta is winning the contest to land the young and educated according to a recent study. Over a “10-year-stretch, the city saw its percentage of 25-to-34-year-olds with college degrees climb from 49% in 2005 to 57% in 2015″. The city now has a greater percentage of those sought-after educated millennials than Dallas (37%); Charlotte (48%) and metro Nashville (49%), according to the data.
What is causing this massive millennial migration into ATL? For one, it’s reasonable to attribute a portion of the growth to the influences of Georgia State University, Emory University and Georgia Tech, which all have expanding enrollments, campuses or programs. And, let’s not forget the value of the “cool factor” in this equation. Atlanta’s 18-hour lifestyle and hip urban amenities make it a leading destination for Millennials.