Generational real estate investment: It’s all over now, Baby Boom - by David Perlmutter

David Perlmutter, QuantumListing/Perlmutter Properties

QuantumListing conducted a Twitter poll asking the question, “Which generation is most likely to invest in real estate?” The four options, in chronological order, were Baby Boomers (1945-1964), Generation X (1961-1981), Millennials (1975-1995) and Generation Z (1995-2015). As you can see, there is some overlap amongst the generational definitions. There is not consensus because those born on the margin can align themselves with either bracketing generation. In the interest of full disclosure, I was born in July of 1962. I consider myself as a blend of predominantly Baby Boomer with a side of Gen X.

Had I written my answer down on a piece of paper and sealed it in an envelope awaiting the results, I would have thought that the answer with the most votes would have been either Baby Boomers or Generation X. Perhaps it was a generational bias because the data here does not support my expectation. (Q: How many Baby Boomers does it take to change a light bulb? A: None, they just hold up their hand with the bulb in it and the world rotates around it.)

The question, which was answered by 3,177 respondents, was open enough so that it did not specify residential or commercial real estate. The poll ran for seven days, and for the first couple of days, it was located at the top of my Twitter feed, so for the most part, the only people responding were my followers, and the followers of those who retweeted. My 3,500 or so followers are mostly real estate professionals or in the allied trades. Although I did not take a snap shot of the early results, Gen X and the Millennials were leading the poll, with Baby Boomers in third and Generation Z in fourth. On the third day, I promoted the poll so that it would appear in more Twitter feeds. Twitter projected that the poll would get a few hundred more responses, but over the next five days, the number of responses mushroomed, and I was surprised to see at the end that there were over 3,000.

What do the results mean to us as real estate professionals? Let’s break it down into residential and commercial. According to an article on MarketWatch.com reporting on a NAR survey, “Some 35% of buyers in 2015 were Millennials, up from 32% in 2014, and their median age was 30, according to the National Association of Realtors. Generation X, those aged 36 to 50, made up 26% of buyers, the second-largest group, and had a median age of 42.” Although there is a discrepancy between the NAR poll and QuantumListing’s polls in terms of absolute percentages, the rank order is consistent. Millennials and Gen X are moving to bigger homes to support their growing families. Baby Boomers, according the NAR survey are divided between trading up and trading down, consistent with the divide between younger Boomers buying multi-generational homes, and older Boomers moving further away and into retirement communities. Interestingly, Generation Z does not figure in the NAR survey, and this perhaps represents an overlooked opportunity for astute developers.

Finding data on who is purchasing commercial real estate is a little more difficult. Anecdotally from the purchase and sales transactions I’ve been involved with in recent years, the trend is skewing toward older owners (the Silent Generation aged 70-90) and older Boomers selling to younger Boomers and Millennial purchasers or institutional ownership. Again, from my reading of trade publications, I would say that is the trend in the broader NY/NJ/CT market as well.

Although I personally am not ready to see my taillights fade in the distance, it’s time to acknowledge the transition from the Baby Boom generation to the Millennials and beyond. Time marches on. With apologies to Bob Dylan, “It’s all over now (or will be soon), Baby Boom.”

David Perlmutter is the owner of QuantumListing/Perlmutter Properties, White Plains, N.Y.