July 7, 2017
Death of the First Time Owner
Average is no longer average. Escalating property prices in prime markets, along with Millennials’ shifting attitudes to home ownership is turning first-time buyers into an increasingly rare species. Instead, Americans between 26 and 34 are buying fewer homes than their counterparts did 10 years ago, according to online platform Trulia.
According to Zillow, another online marketplace, first-time homebuyers are renting for an average of six years before buying, up from an average of 2.6 years in the 1970s. The main driver behind this trend is financial. While low interest rates have made it easier to borrow money, driving up prices, stagnant wages and unstable employment have made it harder for first-time buyers to afford a down payment. The average London property now costs almost ten times the average salary whereas most U.K. lenders cap mortgage loans at roughly half that amount. For a generation that’s often saddled with high student debt and fewer options for full-time employment, that makes buying a luxury that many now dismiss.
Instead, potential buyers often prefer to rent or opt for innovative living options that let them live in high-demand neighbourhoods they otherwise can’t afford. With the rise of mixed use developments and creative hubs that evoke a strong personality, they’re choosing to rent a lifestyle as much as a particular apartment. The most important draw for this group is often the community experience, from fellow residents and retail options to creative opportunities and inspiring space. They’re less concerned with living along a subway line than having access to bike paths, pedestrian plazas, and space to meet people who share their values and tastes. An eat-in kitchen is less critical than a nearby bakery that delivers while a driveway is irrelevant to those who don’t own a car. That tends to put urban development ahead of anything found in the suburbs.
Communal Living as Lifestyle Choice
- Communal living is marketed as a lifestyle choice, not an economic imperative.
- Millennials will pay more to rent in an aspirational urban community than buy something that leaves them isolated in a suburban one.
- Landlords don’t just manage a property but build brands that are associated with distinctive design elements and a suite of services.
WeLive, Essential Living, CWG PRS Research
WeLive is a new residential concept by WeWork which expands their brand to housing, focusing on tight living space and generous amenity, with WeWork members targeted. Essential Living as a new PRS developer/operator developed their brand before designing their projects, as such they have a strong brand integrated directly into the design of their projects. Our research on PRS for the Canary Wharf Group and their new PRS entity “Vertus” explored how the target market and brand is key to developing a compelling offer for this market. The Collective’s recently submitted project at Stratford includes 11m² studios and 23m² “twodios”, which open into communal kitchen areas.