How Generational Trends in Homebuying Is Affecting Hawaii

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Home Buyer and Seller Trends 2019Can you imagine within ten years that new homebuyers won’t be looking at homes on golf courses, nor will they be here in Hawaii buying a second home?

According to Paul H. Brewbaker, Principal of TZ Economics, a Hawaii economics consultant who gave a thought provoking presentation to local Realtors this past week, it will happen, thanks to the homebuying habits of the Millenials, who will be in their mid to late forties in 2029, prime wage earning years when people start considering real estate investments. According to Brewbecker, Millennials don’t play golf. (Although they would gladly put on a GoPro and take off on a golf cart adventure!) Why would they spend the extra money in order to live on a golf course? So, how will that impact the value of resale homes of golf course communities or development of new golf communities? Something to ponder.

Also, Millennials know that climate change is having an impact on coastal regions around the world with rising tides and severe weather incidents. According to Brewbaker, they are more likely to want to buy into a fractional ownership opportunity to spread the risk of their real estate purchases and to forgo the costs AND liability of outright owning a second home, as this generation is all about the experiential lifestyle. Some of the Realtors in the room who heard the trend concerning fractional ownership expressed their opinions that they felt the trend was not going to pan out, however, a real estate developer in Kauai is already marketing a new development and they clearly know who they are targeting:

From their website: Discover how Timbers Kauai provides all the benefits of real estate ownership, but without the hassles of maintaining a second home. Owners are able to come and go when they like, and as often as they like, subject only to the reservation procedures. Whether owners vacation 2 weeks a year or 12, they pay nothing more. They are simply real estate owners in the Timbers Kauai Private Residence Club. “Those darn kids going for fractional ownership”, said the Baby Boomers.

According to the National Association of Realtors “Homebuyer and Seller Generational Trends 2019” the Older Millennials (born 1980-1989) are 26% of recent homebuyers and Younger Millennials (born 1990-1998) are 11% of recent buyers. Gen X (1965-1979) make up 24% of homebuyers and Younger Boomers (1955-1964) are 18% of recent buyers. So, there is almost a split between the two major groups, but what will be telling is how real estate developers will be responding to the trends they see coming in 10 years as they have to start the design and permitting process so far out from building new communities. Will they be building high density fractional ownership homes or 2500 square foot homes?

The number one concern of Millennials in their home buying purchase right now, according to the NAR research, is convenience to access jobs and commuting costs. They don’t mind living in higher density housing near urban centers, where Baby Boomers and their parents have sprinted to the suburbs for decades, causing the present issue of traffic and sprawling homes. On Hawaii Island, Brewbaker said that lack of new homes being built is creating unaffordable housing opportunities for the Millennial generation, forcing them to find opportunities off of this island, causing a lack of younger people on the island for the aging population.

He stated that 50 years ago, there was 1 older person for 30 younger people. Now there are three younger people for 30 older people as in-migration to Hawaii is decreasing. Add to that Hawaii is a favorite retirement destination and 60 million Baby Boomers would love to sit under our palm trees. Compound the aging population with the fact that unemployment has been rising since November 2017 and housing costs have been rising steadily since 2013. Brewbaker stated that we are currently NOT in a housing bubble and he does not foresee the interest rates rising above 5% through 2020.

This is the time the community needs to look at the housing needs for a workforce that can service and cater to a graying populace on Hawaii Island and it needs to meet the future desires of the up and coming generation.

LUVA Real Estate plays an active voice in the local real estate community and works with County planners in lending our advice and advocacy for private homeownership.