Property Management on the RiseHow major economic and demographic trends are creating new opportunities and challenges for property managers.
Whether we embrace it with open arms or resist it every step of the way, we live in an era of rapid technological advancement and lifestyle transformation. Whereas previous generations could rely on similar patterns of work and personal life for decades at a time, we are faced with the need to adapt to significant changes occurring every few years. This rapid pace of change places unprecedented importance on forecasting and preparation. For those of us interested in growing our careers or businesses it is now a requirement to stay ahead of the curve. This paper aims to describe patterns that are deemed significant to real estate property management in the next two decades.
Property Management: A Robust and Growing Industry
According to the latest U.S. Census data the real estate property management industry experienced an average growth rate of 7-8% at the beginning of this decade. The data portrays a substantial and robust industry with over 140,000 active firms generating nearly $36 billion in revenues. By virtually all expert accounts the industry is expected to continue to grow at an accelerated pace in the next two decades as the urban landscape of America undergoes a major transformation. The following four factors are considered amongst the most important demographic and economic forces behind this transformation:
1. The Baby Boomer Effect
2. The Generation Y Factor
3. Municipalities and the Planned Community Concept
4. The Local Living Movement
In this paper we discuss each of these factors and try to understand their main implications for property managers. At the end, we provide a series of conclusions and recommendations for further action.
1. The Baby-boomer Effect
Perhaps the most significant and most frequently discussed demographic topic of the past two decades has been that of the baby boomer generation nearing and entering the retirement age at an accelerating pace. This generation which has arguably had the loudest say in forming many contemporary trends, stands to have an even bigger influence given the degree of wealth amassed.
Who Are They? Numbering around seventy-six million, the American baby boomer was born between 1946 and 1964. A demographic that would be significant on account of its size alone, this group's characteristics include a higher level of education than previous generations and assumptions of lifelong prosperity and entitlement developed during their childhood in the 1950s. Aided by modern medicine and a better diet and exercise regime, the baby boomer generation refuses to get 'old' and continues to push the traditional age envelop by partaking in an active home, travel and work lifestyle.
Money Flows. After decades of gainful employment, running businesses and investing the proceeds, the typical baby boomer is looking forward to a prosperous and indulgent retirement. Multiple factors are at play that could make this dream a reality for many. For starters, baby boomers happen to be closing in on their peak earning years and by virtue of their higher levels of education enjoy healthy annual incomes. As another factor, consider that most baby boomers purchased their homes when home prices were substantially lower (as compared to household income) allowing most to pay off their principal residence mortgages early on. Most boomers offspring are also finishing college and forming their own families, further reducing expenses. Add to this mix the fact that this generation is increasingly in line to receive inheritance windfalls from aging parents and you have the recipe for a significant and unprecedented degree of liquidity in the next 20 years. In fact it is estimated that 10 to 30 trillion dollars will be spent by baby boomers on a variety of small and large ticket discretionary items in the next two decades.
New Digs. As baby boomers retire and are faced with an empty nest, they generally tend to downsize and move from larger single family homes to town homes or condominiums. In addition, given the ample funds at their disposal and the added free time to travel, they are increasingly purchasing second homes and vacation properties. It is quite imaginable to predict that the real estate picture in the next decade will be very different from what we have grown accustomed to in the past 30 years i.e., one that has been focused on owning a large plot of land in suburbia with a single family home built upon it.
What it means to property managers. Both types of transitions i.e., the move to smaller homes (typically condominiums or townhome complexes) and the trend towards vacation home ownership (especially resort properties) are foreseen as major drivers of demand for property management services as both of these trends happen to be away from unmanaged to managed or planned communities.
Not A Landlord, Will Invest. Real estate is a cyclical market with corrections taking place on average every ten to fifteen years. However history shows that well selected and professionally managed, real estate is a secure and stable investment vehicle with solid income generation and capital preservation characteristics. Whether you chalk it up to human nature, common sense or both, as we retire, we tend to want more stability and security in our lives and this is especially true when it comes to our nest egg. We tend to move our investments away from growth oriented, higher volatility assets such as stocks to more stable ones such as bonds. Today, despite the availability of many innovative financial products, real estate investment for the most part requires individuals to become landlords or take part in limited partnerships. While this is certainly possible and practiced gainfully by many, it is not for everyone. This requirement inherently limits real estate's exposure as a mainstream investment class. It is foreseen that in the next 25 years, real estate will become increasingly productized (from current 2-3% to above 50% securitization) and made available as an array of mainstream investment funds by major brand name investment firms.
What it means to property managers.This phenomenon will see the flow of trillions of dollars of new capital into real estate properties that will by definition require professional property management services to maximize yield.
2. The Generation Y Factor
Large suburban lots, quiet cul-de-sacs and spacious 5-bedroom homes may have sounded like the epitome of high living to the baby boomer generation but to the typical gen Y'er the same phrases spell isolation and a maintenance nightmare. While not talked about nearly as much as baby boomers, generation Y whose leading edge turns the home buying age in 2008, constitutes a powerful market force to study, comprehend and plan for.
Who they are. Gen y'ers, sometimes referred to as echo boomers were born between 1980 and 1999 and number upwards of 80 million as a large subset of the American population. This generation which is an even larger demographic than baby boomers is already entering the home rental and purchase market, a trend that will be accelerating in the next few years.
Technology & Media. Whereas computers and the Internet represented new tools to be learned and gradually incorporated into everyday work and home life for baby boomers, they are the natural bedrock of daily communication and social interaction for generation Y folks. Gen Y'ers are highly proficient and perhaps more importantly very comfortable with technology. More than 80 percent use the internet for school related work as well as for social networking. It is not a leap of faith to imagine that they will be making major purchase decisions such as those related to renting or buying homes based on information and research found on the Internet. Keep in mind that generation Y grew up being bombarded by mainstream marketing and branding messages and therefore developed a healthy dose of disdain for mainstream media. The advent of the Internet and explosion of niche media has afforded this demographic the luxury of being highly individualistic. In essence they take it for granted that they can tune into the information they like (be it music, news or home listings) when they like and in as much, or as little detail as they like. This is in sharp contrast to the TV generation who was essentially at the mercy of the broadcaster for type and timing of content being delivered.
A to Z of Indian Age of Authoritarian Democracy Communication Effect Communication Skills A Vehicle On The Road Corporate Governance Investing in the Emerging Daily Politics Blog How to Find Democracy at Its Best E Governance Election of the President of Pakistan Five Tips For the Best Queen Friendship and Politics Can They Mix Government Bids Top 10 Tips Government Contract Proposal Writing Tips Handle the Argumentative Communicator and Difficult How Ancient Greek Democracy Worked How Does a Bee Become the Queen If President Obama Were My Patient Ignoring Importance Of Communication Is A Direct Importance of an Effective Community Relations Introduction and Brief History Is President Obama Channeling President Richard Issues Which Are Plaguing Local Self Government In New Jersey Monkey Cage Democracy Moving to Queens New York O P Bhatnagar A Poet Perestroika and Democracy in Russia Political Discourse and Participatory Politics The Ugliest Fascination on Earth Post capitalist Free Market Economy President Barack Obama Must President Bush and Pyramid Numerology Problems In Managing Government Purim Why Did the Womanizer Queen Bee Rearing Queen Hatshepsut Egypts Queen Queen Honeybees Are Made Not Born Queens of Amsterdam Quest for Democracy in Ethiopia Secrets to Becoming a Master Serious Defects in Modern Democracy Seven American Presidents Have Uranus Six Myths of Effective Communication The 2008 Election Results Dysfunctional The Art of Communicating The Government GIP The History of Cornish Independence The Meaning Of Queen The Pope And The President The Role of Government The Significance of the Queen The Top Five US Presidents Top 10 US Presidents True Democracy US Government Sales Marketing US Presidents That Went to Harvard Understanding the Communication Process The Key to Organisational What Is The Best Suitable What is Political Science Where Now For European Why Workplace Politics Charts the Path
5 Major Benefits of Leasing A Basic Guide To Generating Revenue Apartment Property Management Audi Business Leasing Automated Recoveries Key Can Property Management Make a Finance Difference Commercial Agents Sales Presentation Commercial Property Management Commercial Property Contract Hire Information Do You Need Property Management Does Employee Leasing Make Sense Dubai Property Management Employee Leasing Lover Employment Leasing HR Management Expediter Truck Service Financial Analysis for Workplace Lease Five Considerations of Hiring Property For Property Management Jobs Freehold And Leasehold Property Government Bidding Glossary (pt 1 2) Green Car Scheme How Property Owners Benefit How To Break Apartment Lease How To Evaluate Management Software Importance of Lease Abstraction Internet Based Lease Accounting Is Pre-Pack Administration Right for Finance Lease Administration Software Lease Management Software Lease Or Get Property Lease Your Next Car or Fleet Leasing Office Equipment Leasing Software And Fleet Management Let The Property Management Do the Job Make Finding a Property Easier Make Finding a Property Management Company Make Property Management Effective Oklahoma City Property Management Companies Property Management Company for Business Property Management Fees Explained Property Management on the Rise Renegotiating a Commercial Lease Shopping for a Property Tenants Obligations Under Commercial Property The Best Atlanta Apartments The Evolution Of Property Top 9 Questions to Ask Uncover Which Property Management Jobs Waterloo Property Management What Is Staff Leasing What Type Of Property Owners Look For What You Will Get From Property Why It's Important to Get Property Why You Need Property Managers orleans Property Management Company Why You Should Hire Manager Workflow Automation In The Leasing Empirian property management - Law
© Riverside Property Management