Americans have been enjoying longer average lifespans for decades.
There is a commonly used cliché in politics about demographics being destiny that pertains to the real estate space. But what you’re likely thinking is, “In what way, specifically, do changing demographics relate to real estate?”
In a word—age.
Americans are living longer, and have been consistently moving in that direction for three-four generations’ time. And though a recent report by the NCHS suggested a life expectancy drop in 2015, it was slight.
Since the late 20th century, retirement towns, senior citizen communities, and nursing homes have played a role in accommodating our population’s shift towards longevity. Many children and adolescents come to know their grandparents and great-grandparents via bi-annual trips to such places.
But a rising trend in the real estate space—the multi-generation home—has people reconsidering their family priorities.
One builder in particular, Lennar®, is shrewdly working to both a) further cultivate and b) effectively target this market. The Miami-based homebuilder has enjoyed notable success in the selling of its NextGen® multi-generational residences. These are marketed under the perfectly fitting Home Within A Home® tagline, as the concept consists of providing dual-housing (complete with privacy and independence) under one roof within a single property.
But is this market destined to grow as demographic realities pertaining to age and longevity continue to establish? Or has Lennar® merely identified a viable but narrow niche within the broader real estate market?
A quick look at the company’s Q4 earnings indicates that this niche (if that’s what it ends up being) has not yet been saturated, as revenues from multi-family unit sales increased by 84% from the prior-year quarter. Granted, that is a narrow period in which to determine market capacity, but an increase of that sort would seem to bode well for both NextGen® models and for the competitors soon to follow.
Even if demographic shifts are set to reshape the homebuilding market, the question is one of scale. In other words, should those working on the mortgage and real estate side of the equation be braced for a sea change, or for modest ripples within the pond? This is difficult to know, but the question is one worth continually asking as events and changes outside the real estate market continue to influence and give rise to trends within it.