Is there competition between gen Y and baby boomers?
Much has been written about generation Y wanting to live in the city – with important factors being a diverse variety of things to do, good public transportation, the latest amenities in their residence and in their building (like a gym). Many articles and reports have also noted the lack of priority given to car ownership (I can’t tell you how many anecdotal stories I hear of people getting their drivers’ license long after their 16/17th birthday) and the heightened priority to “walkability.”
Size of the home isn’t as big an issue either in studies of urban living and its appeal – with many newly constructed apartments in hip cities like Vancouver and San Francisco adopting the Japanese style mini-studio approach – built for people that use their apartment primarily to sleep as they tend to be out a lot.
Where the Competition Between gen Y and Baby Boomers Is
And if you are in Gen Y and the family is a long way off, this all likely sounds appealing. However, there’s a problem. That 2 bedroom condo you’ve been spying near Harvard Square, well grandma just called and she outbid you on it. Sorry I know you were expecting her to move in to that lovely retirement community- the one with all the fancy amenities and people her “age.” However, the current crop of 60+ people differ markedly from retirement aged people in previous generations. In short, they want what you want. Now that you are out of their house, they want to downsize their home and move to the city too.
They want to go to the theater, to nice restaurants, to concerts and to enjoy city amenities. And they have the cash they need to do this. They are selling their large suburban homes (to the dwindling supply of people that want them), taking the cash and buying (and sometimes renovating) 2 and 3 bedroom lofts, condos and townhouses in hip towns. So now we have 2 generations – boomers, and their kids, vying for the same properties. Is everyone doing this? Of course not – plenty of people want the quirt life of the suburbs and many retirees still would like to live in a community of their peers with plenty of amenities. And plenty of Gen Y people are having kids and needing a home in the ‘burbs with a good school system and 2 car garage.
Can Gen Y Keep Up with Endless Boomer Cash?
However, enough of this Gen Y & boomer trend to the city is happening to cause serious demand and price increases to nice city properties. Remember, boomers will be quality of life buyers and will likely overpay for what they want. Millennials may not want to overpay and may not be able to overpay for these properties.
That brings up this interesting quote from a recent article:
Baby-boomers, already accused of enjoying free university education and final salary pensions denied to younger generations, are now in the dock for snapping up smaller homes that would traditionally go to first-time buyers and young families.
Bottom line, if you’re Gen Y, be prepared for some unusual competition for that cool condo downtown. And this competition between Gen Y and Baby Boomers is showing no signs of letting up. Millennials may just have to pray for another economic crash to stand a chance. Assuming Millennials are stashing cash in the bank for home purchase. And assuming boomers have much of their net worth in economically sensitive places.
Maybe college professors had it right all along – work and live in the hip areas and enjoy life more!
Note: Looking for a smart way to buy your home? Are you downsizing or is it your first time? There are different strategies and considerations when considering real estate. As mentioned above, a boomer with lots of cash may not be price sensitive – they may even be willing to lose a little to live the way they want. Younger buyers, who may take a job across country in 3 years, can’t afford to overpay and make a bad investment.
We have a team of planners, real estate professionals, accountants, mortgage brokers and other clients who are experienced real estate investors, who can help you make a decision. Contact us before you make any moves:
Contact Form or
Thanks for reading!