For decades, baby boomers have been the largest generation in the United States. Consisting of adults between the ages of 52 and 70, this generation is defined by the increase (or boom) in babies born after World War II. Generally, their children form the millennial generation, which is made up of adults between the ages of 19 and 35, according to Pew Research Center. Just last year, millennials officially overtook baby boomers as the largest living generation in America.
Together, these two large generations are revolutionizing the remodeling market. According to the latest report from the Harvard Joint Center for Housing Studies, expenditures by baby boomers are expected to grow nearly 33 percent by 2025, accounting for more than three-quarters of total gains over the decade. This boost in spending is attributed to investments in aging in place. Already, those ages 55 and up generate just over half of all home improvement expenditures in the country.
Renovations that help homeowners age in place consist of projects like curbless showers, counter-height microwaves, central vacuum systems, one-story floorplans, etc. Most existing homes do not include these universal design features, which means that many boomers are forced to renovate if they want to stay in their current homes. In 2014 and 2015, 2.1 million homeowners age 55 and older reported taking on one or more projects like this, the report states. That equates to nearly 1 in 10 boomers who remodeled their homes in those two years.
With such extensive experience in remodeling, baby boomers may be able to help their children make wise remodeling choices as well.
Millennials Joining the Ranks
House prices are going up, allowing many homeowners to retain some of the equity they lost during the Great Recession. However, this makes it more difficult for millennials to purchase their first home. If they are able to afford a larger mortgage, they will have less to spend on improvements and repairs. Alternately, they can choose to rent, but high rent prices make it difficult to save for a down payment.
Plus, they’re oftentimes dealing with student loan debt and a lower-than-usual income. As a result, many millennials are pushing homeownership off until later. Those who are ready to buy now are seeking older homes that they can purchase for a lower price and remodel. (This is where that experienced baby boomer parent comes in!) Millennials may be slower to take the step into homeownership than past generations, but when they do, they present a significant opportunity for the future.
Millennials have a unique wish list when they’re buying a home. They want something that’s energy efficient, environmentally sustainable and technologically advanced, according to the Harvard Joint Center for Housing Studies report. This includes energy-efficient appliances and building materials; power sources like solar and geothermal; as well as home automation for entertainment systems, lighting, security systems and even appliances. As millennials exert their home-buying powers in the market, these areas are expected to experience significant growth.
Overall, The Harvard Joint Center for Housing Studies projects homeowner spending on improvements to increase 2 percent per year on average through 2025 after adjusting for inflation. “And as members of the millennial generation start to move into their peak spending years over the coming decade, their decisions to form households, get married, start families, and buy homes will increasingly set the pace of the remodeling market expansion,” the report states.