Humans, for the most part, gave up living permanently in caves or tents centuries ago. Today new homes are a marvel of technology. Generation Y, which is currently between the ages of 11 and 31, is the largest generation of Americans ever. And they are the most high-tech generation of Americans ever.
Those two facts describe what is about to occur in the new housing industry. Gen Y wants to purchase a new high-tech home. Most Gen Y’s cannot afford a $500,000 home. They can afford a starter home. They are also having a huge impact on demand for apartments.
Every community should want Gen Y as residents because they are the high-tech knowledge workers that businesses want today. Communities that push Gen Y away with high housing prices will suffer economically in the future because they won’t have the knowledge workers living within their boundaries and therefore they will not attract new businesses.
But because of their size and because of their desires, the housing industry is just beginning to experience the impact of Gen Y. Although the National Association of Homebuilders, NAHB, says that the housing industry is approximately 15% of the American economy, when I was in Grad school in ’93, my estimate was that the housing industry tentacles approach more in the range of 25% of the American economy.
Probably Dr. Bernanke is focused on dropping mortgage interest rates to levels not seen before in our industry in order to make housing more affordable, thereby increasing the demand for housing and the absorption of housing units on the market. Since you cannot build a new house or apartment on a left-handed sky hook, the net effect of his efforts will be an increase in demand for land.
We believe that those investors who buy good tracts of land today will look exceptionally brilliant in five years. Let us help you. We enjoy making our clients look brilliant.