Real Estate might seem to be all about the thrill of the next deal, but its been proven time and again that long-term strategy and vision are always the wiser focus. But what, where, and how exactly does one formulate a long-term vision or strategy of real estate? I will attempt to provide you with food for thought and discussion through analyzing available statistics of demographics and employment data specific to Boston.
The Millennial Effect
Who are the Millennials? They are those born from 1980-1997 (currently ages 18-35). Millennials are unique – they are the most educated generation, are much less likely to be married than previous generations, and have grown up in the midst of the technology boom (Pew Research). The Millennial generation is of critical importance to real estate predictions, and a recent study from the Pew Research Center highlights their specific statistical significance:
“This year, the ‘Millennial’ generation is projected to surpass the outsized Baby Boom[ers] as the nation’s largest living generation. With immigration adding more numbers to its group than any other, the Millennial population is projected to peak in 2036 at 81.1 million.” (Richard Fry, Pew Research Center).
Simply put: there are tons of Millenials. They are beginning to dominate the job landscape and will have a big impact on macro real estate trends for the next 20-30 years. I have included some relevant and interesting statistics below to help pinpoint where they will be going and why.
- The demographic from age 25-29 are the people most likely to live in a city (this is true of all generations, not Millennial-specific).
- In the current age cohort from 25-34 years of age, only about one-third have bachelor’s degrees. Two thirds do not.
- Since 2000, the likelihood that these 68% of non-college educated people live in a city has gone down significantly.
- Since 2000, the likelihood that the remaining 32% (the college grad Millennials) move into a city has gone up 17%.
- All stats from fivethirtyeight.com.
In conjunction with the increase in college grads moving into highly urbanized areas, we see it is less likely that a person age 60+ lives in an urban neighborhood, as 60+ people now take longer to move out of their single-family homes. These factors together show that more urban neighborhoods will have an increasing population of young college educated people and a shrinking number of older people (aged 60+).
Cities with high demand for college degrees attract Millennials and reward urban development and investment
In our rapidly changing technologically-driven world, higher education becomes more valuable and those with degrees become more desirable and employable in the workforce. Boston-based employment firm Burning Glass Technologies confirms this in a recent study, “‘Research found that employers are more likely to replace workers who do not have bachelor’s degrees with those who do.’ One reason for this, according to Burning Glass, is that many ‘middle skills’ jobs are becoming more technological and complex” (Inside Higher Ed). It seems quite likely that this third of the Millennial demographic (the college-educated third) will be the ones driving future downtown super-urban city growth. Since Boston is widely known for its world-class hospitals, universities, and thriving biotech industry, smart investment and development in urban neighborhoods should pay off while the steady influx of young college educated Millennials keep demand for innovation, development, and growth, high.