Successful investing, no matter the industry, requires reading the tea leaves to determine what the future may hold. What are the market trends that will shape supply and demand? What technology and new developments are forthcoming that will affect how the industry works? What are the demographic trends that will inform and change the industry? It’s perhaps this last category, demographic trends, that is offering up encouraging news for fix and flip and ground-up construction investors.
According to the Census Bureau, more than half of U. S. millennial households were homeowners as of 2022, which means there are millions of individuals in this demographic – the largest generation to date – who will be primed for homeownership over the coming years. This population of 30-to-39-year-olds will continue to expand over the next seven years.
The fact is that many of these millennials are ready for homeownership now, but high interest rates and a lack of inventory have kept them in renter status. For ground-up construction investing, a consistent pipeline of potential buyers will continue to expand for years to come.
Another key demographic trend that offers significant opportunity for the fix and flip market is with baby boomers. Research shows this demographic has been staying in their homes longer, contributing to the current inventory shortage. As boomers get older, they will age into shared family and assisted living options. These additional homes coming on the market will help relieve inventory shortages nationwide, but they will also require updating and upgrading–a challenge America's fix and flip investors will step up to meet.
According to the 2021 American Housing Survey (AHS), there are an estimated 942,000 single-family homes owned by someone age 60 or older that are considered “inadequate” dwellings requiring significant repairs to make them livable. Of the 32 million single-family homes that are considered “adequate,” many will still need to be updated to meet the standards and preferences of new homebuyers. These demographic trends are encouraging for real estate investors with an eye on what the future holds.