Shrinking in Size

Real Estate Preferences

By Yardi Blog Staff on Jul 25, 2013 in News

As the saying goes, location isn’t just the most important thing in residential real estate; it’s also the second and third most important, too. A recent report released by the Urban Land Institute (ULI), “America in 2013”, reveals a growing preference among young adults to live in urban environments and mixed-use communities with reliable, convenient transit service, in close proximity to jobs and entertainment destinations.

Gen Y-ers preference for city living may come as no surprise yet the same trend may be noticed among Gen X-ers and Baby Boomers. As empty-nesters develop a taste for traveling, sustainable lifestyles and relaxed living, renting becomes a viable alternative to home ownership. Moreover, apartments in the cities offer great amenity packages that often times surpass the comfort that you could afford in a suburban single-family residence where you have to deal with maintenance, replacement, upkeep, wear and tear, and potential depreciation.

Based on a nationwide survey of 1,202 adults conducted between January 16 and February 3, 2013, the report suggests that demand will continue to rise for infill residential development that is less car-dependent, while demand could wane for isolated development in outlying suburbs. In addition, data shows that people have come to value location and sustainability over unit size and proprietorship. Among all respondents, 61 percent said they would prefer a smaller home with a shorter commute over a larger home with longer commute. Fifty-three percent want to live close to shopping; 52 percent would prefer to live in mixed-income housing and 51 percent prefer access to public transportation.

As the largest demographic group today, Gen Y or Millennials, who are also the most racially and ethnically diverse cohort, are expected to have the most profound impact on urban growth patterns and land use. Fifty-nine percent of Gen Y said they prefer diversity in housing choices; 62 percent prefer developments offering a mix of shopping, dining and office space; and 76 percent place high value on walkability in communities.

“The choices being made by these groups are upending long-held notions about what is considered traditional neighborhood development,” said ULI Chief Executive Officer Patrick L. Phillips in a statement. “We’ve entered an era in land use that will be defined by development that conserves land and energy, and which offers consumers plenty of options in where they live and how they get from one place to another.”

Authors note that fifty-four percent of the Gen Yers surveyed are renters; as are 63 percent of African Americans and 52 percent of Latinos. While most respondents said they rely mostly on cars to get to school or work, more than half placed a high priority on proximity to public transit, and 23 percent reported walking to destinations, the highest percentage of walkers among the generations.

Of the three major generations in the report (Gen Y, Gen X and Baby Boomers), Generation X is the group most likely to favor single-family suburban neighborhoods and the most likely to have children living at home (70%).  Less than half of the Gen Xers (45 percent) said they wanted public transportation options; 92 percent said they commute by car. Gen Xers were the least likely to value being close to friends and family, medical care, shopping and entertainment.  However, despite these views, 54 percent indicated a preference for a shorter commute with a smaller home. Forty-three percent preferred a longer commute with a larger home.

The survey included responses from Generation Y (representing 30 percent of the total), born between 1979 and 1995 and numbering near 80 million; Generation X (23 percent), born between 1966 and 1978 and totaling about 50 million; Baby Boomers (31 percent), born between 1947 and 1965 and numbering 75 million; War Babies (12 percent), born between 1932 and 1946; and the Silent Generation (3 percent), born in 1931 or earlier; together War Babies and the Silent Generation number 35 million. Not surprisingly, they manifest little or no interest toward moving. They own single-family homes and prefer living in safe, highly walkable communities, close to family and friends, medical care, shopping, entertainment and parks.