Does Later Marriage Hurt Residential Construction?

11 May 2019 03:44

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<p>The American Dream: graduate high school, get a college degree, land a great career opportunity, get married, have a baby, buy a house. The exact order those things take place is no longer set in stone for our culture. For one thing, Millenials are marrying later and some residential contractors fear that may create a lull in the new construction market. That’s not necessarily a bad thing, according to a target=&quot;_blank&quot; rel=&quot;nofollow noopener CNBC report.</p>
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<li>Millennials are marrying at a later age than previous generations</li>
<li>57% of first-time home buyers are married, down from 75% in 1985</li>
<li>Mortgage rates are expected to continue rising with the Fed rate</li>
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<h2>What Does Marriage Have to Do with Housing?</h2>
<p>Many couples still wait to buy a house until they have the advantage of two incomes to make it work. With Millennials marrying later, it means putting off that first home purchase. If those purchases come later,&nbsp;what happens when they’re at the traditional “married and buying a home” age? Douglas Yearly, CEO of Toll Brothers puts it in perspective.</p>
<p>“We know they’re [Millennials] marrying later, so they’re buying homes later, but that also means they’re wealthier when they buy”</p>
<p>– Douglas Yearly, CEO of Toll Brothers Construction</p>
<p>So even though they may buy later, they’re buying more expensive houses. That’s a good thing for construction firms that have a wide range of plans to choose from or who target more high-end homes.</p>
<p>The other interesting statistic here is the percentage of married first-time home buyers. In 1985, 75% of those buyers were married. In 2018, it’s only 57%.</p>
<p>There are a couple of possibilities that go along with that stat. For one, Millennials may be in a position to purchase a starter home while they’re still single. Alternatively, it may still be a two-income situation, just with an unmarried couple making the purchase. While the idea of buying a house with someone that isn’t committing to marriage terrifies me, banks are happy to lend.</p>
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<h2>The Takeaway</h2>
<p>As a residential homebuilder, how flexible are you in your plans? For the Millennial generation, the smart move seems to be to have plans that cover starter through luxury homes. You can even segment your business into two distinct parts if you’re able to handle it.</p>
<p>If you’re not currently targetting the $250,000+ price range, it’s something worth your serious consideration to attract buyers that have more money to spend when they go after that first home.</p>
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