Each generation shares commonalities, preferences and experiences during their life.
Generation Z, the millennials, generation X, baby boomers, the silent generation and greatest generation have differing needs and views related to real estate that are a product of their generational upbringing. Commercial real estate, investments and housing choices impact our lives in different ways.
My parents purchased their first and last home in 1951 shortly after they were married in 1949. My father was 28 and my mother 25.
They paid less than $15,000 for the small three-bedroom house, and were its first owners.
After they passed away my brothers and I were sorting through old paperwork; I found the purchase agreement — it was one-sided on legal-sized paper. The promissory note was one letter-sized page that didn’t even fill the entire page.
My father later purchased a commercial lot. The land purchase contract was on a handwritten document and there were no financing documents because the seller financed with a handshake.
He paid about $20,000 and constructed a building as he had the funds available. He moved into the building in 1965 where he operated his business for several decades.
Years ago, my brothers and I sold the properties. Needless to say the documentation has increased significantly. Now there are many disclosures — something not even heard of 50 years ago — and the contract itself is 12 pages. As you would assume, the properties sold for a lot more than their original price.
Besides the increase in paperwork and the difference in values from today, how has our personal views of real estate changed over the generations?
I remember the stories my father and mother told of the uncertainty they had in maintaining the $85 a month house payment as well as the payment for the commercial property.
My father was self-employed and was the only income earner — my mother was a stay-at-home mom who raised three boys. This is the way it was done in the ‘50s and ‘60s.
Our monthly homeowner’s insurance costs today are more than a house payment back then, but this represented about 20 percent of a family’s income when you add all the expenses of ownership. Still the economy of scale is different today where homeownership can reach 35 to 40 percent of a family’s income.
Demographers study trends and extrapolate characteristics of groups of people through time.
For example, in the ‘40s and ‘50s with more women entering the labor force and our new take-charge aspirations after World War II, we gained a new optimism, which poured over into our attitude that we could accomplish much more including buying and developing bigger and higher-priced homes and commercial real estate.
This trend continued in subsequent generations, but we see this changing today.
We like to categorize people, places and things to see how we fit in and perhaps determine the forces at work and why we do the things we do.
In part two we will take a look at the six generations currently alive today and their differing views of real estate.