By Rick Reynolds.
For some time now the market has been shifting towards both an “experience economy” and a “shared economy.” Essentially two sides of the same coin, these economies are driven by the ascending generation of American consumers, the Millennials—those born between 1982 and 1994, reaching young adulthood around the year 2000, notably the beginning of both the Internet age and global warming awareness. For Millennials, ownership is less important than mobility—mobility that is not so much upward, as outward. In short, Millennials seek authentic, local experiences derived through borrowing, renting, and sharing.
Nowhere will this new phenomenon become more apparent than in the ways houses will be designed; a subject we’ll consider shortly.
To be sure, as an economic group, Millennials cannot be painted with too broad a brush. The most affluent Millennials, a small subset, fall under the classifications of HNWIs (High Net Worth Individuals) or HENRYs (High Earners Not Rich Yet). By far the larger of these two affluent groups, HENRYs have incomes between $100,000 to $249,999. The vast majority of lower income Millennials, however, are struggling with high levels of college debt and the low job and wage growth experienced over the past decade. Regardless of net worth and income level, Millennials still have more in common with each other than they have with preceding generations.
So, whether out of economic necessity, environmental concerns, or the cultural proclivities of the first web-connected generation, a sea change in priorities among Millennials is manifesting itself in the marketplace. And we see this new economic force everywhere we look.
- Millennials are buying fewer newspapers, books, CDs, and DVDs, preferring to stream them. With the democratization brought about by the internet, they grab and disseminate online stories ala carte through social media sites like Facebook and Twitter. For them, access is tantamount to possession.
- While traveling, Millenials book fewer hotel nights, seeking to rent everything from rooms to whole houses from Airbnb, Home Away, VRBO (Vacation Rentals by Owner), and other peer-to-peer businesses— even from luxury camping outfitters offering, “Glamping,” glamorous camping.
- And related to this shift in travel habits, Millennials are buying fewer cars, opting instead for ride sharing services like Uber and Lyft, or fractional car rentals by the hour—or even by the minute—with companies like car2go.
This cultural reprogramming will have an impact on everything from high ticket items like primary residences and vacation homes, to down-ticket items like electronics, tools, entertainment, and media. So why is this phenomenon occurring?
The widely acknowledged shift in mindset among Millennials is thought to be a reaction against conformity and urbanization. For this emergent group, authenticity is key. They prize consumption of experience over consumption of material things. So, when it comes to travel accommodations, they interpret buildings not as spectators, but as participants.
Rather than being herded into dense population centers in search of hotels and amenities, they may seek the less pretentious authenticity and interaction of the home environment. As such, the decentralized nature of the Airbnb model plays to this democratization and de-urbanization trend regarding travel vacations.
Interestingly, and perhaps counter-intuitively, many enterprising Millennials will likely want to capitalize on their experiential, shared economy. So when Millennials do buy houses, they may look to buy flexible living spaces that can accommodate both parents and grown children. They may also seek Airbnb-type rentable spaces that provide additional income.
Conversely, when the Baby Boomer parents of Millennials buy new houses, they may increasingly look for flexible, adaptable spaces, either for their Millennial offspring still living at home or, as empty nesters, for home offices, yoga rooms, and visiting grandchildren. Additionally, for those Baby Boomer parents nearing retirement, having Airbnb type rental income can ease the burden of living on a fixed income.
It’s important to note here that Baby Boomers are still the dominant economic force in America, with their $2.4 trillion in annual income accounting for 42% of all after-tax income in the U.S. (Consumer Expenditure Survey) and 75% of the country’s wealth. Were they a country, it would have the third largest economy in the world. And 50+ year old Americans collectively spend $3.2 trillion annually, a figure greater than the GNP of the United Kingdom, and countries like Italy, Russia, Brazil, and France.*
For these forward-looking owner/builders planning to build a vacation home, designing second homes that revert to primary residences once they’re no longer tethered to high labor mobility areas—either through retirement or online commuting—is trending.
But as a growing number of Millennials adapt to their 21st century realities, they will define the economic and ecological landscape going forward. And their houses will reflect their values and lifestyles.
So what does a Millennial-ready home look like? Real estate professionals tell us that Millennials, as a group, tend to shun antique and old, energy-gulping, maintenance-heavy homes, preferring the freedom and efficiencies offered by the more modern, lower maintenance, energy efficient, green homes. But in reality, there is no single, defining feature of a Millennial-ready home, and essentially that is the point. No one can predict with any accuracy one’s future needs. Therefore, flexibility in how the home can be configured will be key to adapting the home to their emerging needs over time.
The good news is; there are flexible, adaptable homes available today that are designed around the principles of two visionaries; architect, John Habraken (open building), and author, Stuart Brand (How Buildings Learn): values made practical by the pioneering builder of green, high-performance homes, Tedd Benson.
These Open-Built® homes—organized around how homes actually live over time—have their structure and mechanical systems disentangled, so they can accommodate change without the material waste and high cost normally associated with the demolition and reconstruction involving multiple trades.
And with their thermal envelopes also disentangled from the structure, these low-load, energy-sipping homes can be easily powered by small, renewable energy systems like photo voltaics (PVs).
Today, these energy-efficient, adaptable, Open-Built homes are available through the two companies Benson founded: Bensonwood, a highly custom Montage builder of timberframe and hybrid homes, and Unity Homes, a Montage builder of pre-designed, optimized, homes with defined levels of customization.
If you would like to learn more about homes exquisitely suited to the Airbnb age, go to Bensonwood.com.