Perhaps the biggest influence on the California housing market are generational trends. The paradigm shift from Boomers to Millennials is not only evident in their behavior differences, but also in the home marketplace.
In simplest terms, the boomers aren’t moving, and the millennials are – out of the state – driven in part by high home prices in California, said Leslie Appleton-Young, chief economist for the California Association of Realtors.
“I think the major trend that you’re going to see is millennials leaving California,” Appleton-Young told the California Desert Association of Realtors during an annual forecast on Thursday in Palm Desert. “Unlike 20 or 30 years ago, there’s actually a lot of cool places to live today where there are jobs. Coupled with being able to be more mobile.”
And don’t think millennials have no interest in home-ownership. They do, economists say.
“They haven’t been homeowners because they haven’t had jobs,” said Appleton-Young, pointing to what may be one of the most robust housing neighborhoods in Southern California: downtown L.A.
“It’s finally there. And in a few years, it’ll be even more there,” she said.
“When we talk to people that are buying downtown and ask them, ‘Why would you buy in downtown L.A?’ They talk about short commutes. They talk about being where the action is. They talk about Staples (Center) and L.A. Live. You know what they don’t talk about? Schools. It’s the kid-thing. This is the ‘delayed adulthood’ — partly because ‘I had to. I didn’t get a job.’ And partly because the baby-boomers are the most co-dependent parents that have ever existed.”
Boomers, on the other hand, are staying in their homes, rather than shopping for a retirement home in, say, the Coachella Valley.
“For the first time, we have not just a housing affordability problem for young households that want to start to move up the ladder, but for repeat buyers,” she explained. “And I think that’s very important for the value here, because so many people do want to come up here and get in ‘quote-unquote, get into an active retirement.’
“And I think the issue is not that people don’t want to be here. Who would not want to be here? But it’s like, ‘I’m stuck where I am.’ And I think this is something that’s going to impact the market for quite a long time,” Appleton-Young said.
So what’s keeping the boomer generation where they are? For some, it’s a great mortgage. Remember refinancing? Many – a majority, according to CAR surveys – are worried about the ability of their children to purchase a home. Roughly 43 percent want to help their children purchase a home, another factor preventing boomers from becoming buyers.
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