Echo Boomers: A New Breed of Buyer

 

Boomer children contribute to surge in condo sales.

 

HONOLULU ADVERTISER   September 30, 2007

 

BY LISA SCONTRAS

 

Custom Publishing Group

 

When Michael Marks started searching for his first piece of real estate, he knew it had to be pet friendly to accommodate his 100-pound Labrador Retriever, it had to have two bedrooms because he wanted to get a roommate to help pay the mortgage and it needed to be in town because he hates being stuck in traffic.

 

 

Other than that, for this 26-year old budding real estate investor, it just had to fit his price range.

 

“I don’t have a problem just buying starter places for myself; I don’t really need to have anything too terribly nice as I’m not married and don’t have any children to worry about,” says Marks, who has a bachelor’s degree in business, economics and global studies from the University of California at Santa Barbara. “Real estate is a stable investment, long term. So it makes financial sense to put my money into an investment that is going to make money.”

 

Marks, who just closed on his first piece of real estate — a 2-bedroom condo in Makiki — four months ago, is part of the demographic group called the Echo Boomers. Boomer children, who span into both Gen-X and Gen-Y, comprise a larger portion of the total home-buying population than ever before. According to Marks, it’s because they aren’t putting homeownership on hold for marriage or other life events and they look at real estate differently than their boomer parents did.

 

“My parents own one home — it’s the one I grew up in,” says Marks. “They see real estate as somewhere you come home and hang your hat. I see real estate as an investment opportunity as opposed to just a place to call home.”

 

The U.S. Census Bureau data shows that homeownership among the under 30 crowd has been rising. In 1993, less than 15 percent of people younger than 25 owned their own home, but by 2006, one in every four from this age group were homeowners. About a third of people ages 25 to 29 owned a home in 1993; by 2006, 42 percent had purchased a home.

 

Marks started out just like many boomers did — he went off to college. While living away from his parents, Marks was keen on the independence that came with being on his own. So when he moved back in with his parents after graduation, it really “cramped his style.”

 

“But living at home gave me the opportunity to save some money,” he says. “And I gave myself a timeline to get out.”

 

Lawrence Yun, senior economist at the National Association of Realtors says the younger generation seems to understand better than some that housing is a good long-term investment.

 

“I’m hoping to buy and hold ... and never sell,” says Andrew Roth, who at age 31 will close on his second piece of real estate on Tuesday in Hawaii Kai.

 

Roth, an international business graduate of Loyola College in Maryland, states a couple of different reasons for making real estate his investment of choice. About 15 years ago his parents began making some investment real estate purchases that now bring in a lucrative monthly income — enabling them to travel and live quite comfortably in retirement. He also liked the idea of leveraging his money.

 

“I graduated from college right around the time when the dot coms busted,” he says. “A lot of friends lost a lot of money so we were skittish about dumping money into the stock market. So I stayed with index funds. Then, once I had some money saved up, I saw that I could earn 10 percent in some kind of fund or ... at the time the real estate market was going up at least 10 percent. So I could watch the $15,000 to $20,000 that I’d saved earn 10 percent or earn 10 percent on the entire $250,000 I paid for my place.”

 

Like their boomer parents, echo boomers’ proclivity for homeownership is influencing a number of real estate trends.

 

“They (echo boomers) have contributed to the recent resurgence of many downtown areas, and are part of the reason that condo sales have increased as a percentage of all homes sold, from 6 percent of the total market a decade ago to 13 percent in 2006,” says Yun.

 

This generation’s reliance on the Internet for information has spawned another trend. According to the 2006 NAR Profile of Home Buyers and Sellers, four out of five recent home buyers used the Internet last year to search for a home, compared with only 2 percent in 1995.

 

While both Marks and Roth went through an agent at Prudential Locations to advise them on negotiations during their transactions, their initial property searches began on the Internet — Prudential Locations’ Neighborhood Expert, which sends out property matches to your email regularly.

 

Marks and Roth also found analyzing properties online offered them the ability to make an unemotional comparison of price-per-square foot and amenities to find the place that offered the best value — another generational trait.

 

“It’s definitely all about the numbers and getting the most bang for the buck,” says Marks.

 

 

 

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