© 2001 h.s. dent foundation only 10% of the bob hope generation attended college. that number...
TRANSCRIPT
© 2001 H.S. Dent Foundation
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
4,500,000
5,000,00019
70
1975
1980
1985
1990
1995
2000
2005
2010
2015
2020
2025
2030
Only 10% of the Bob Hope Generation Only 10% of the Bob Hope Generation attended college. That number soared attended college. That number soared to 25% for the Baby Boomers. It is to 25% for the Baby Boomers. It is estimated that over 70% of all Echo estimated that over 70% of all Echo Baby Boomers will have some college Baby Boomers will have some college education, with over 50% receiving a education, with over 50% receiving a degree. As the Wall Street Journal put degree. As the Wall Street Journal put it, “There’s No Such Thing as a Safety it, “There’s No Such Thing as a Safety School Anymore”. College applications School Anymore”. College applications are expected to grow over 10% per year are expected to grow over 10% per year for the next 10 years. While some for the next 10 years. While some facilities can expand to handle this, facilities can expand to handle this, most urban campuses are landlocked most urban campuses are landlocked and have no ability to expand for and have no ability to expand for student housing as well as classroom student housing as well as classroom space. space. During the boom years through 2009, it During the boom years through 2009, it might be more prudent to send children might be more prudent to send children or grandchildren into the workforce for or grandchildren into the workforce for a few years before college. With some a few years before college. With some work experience behind them, they can work experience behind them, they can obtain degrees during the economic obtain degrees during the economic contraction when employment is harder contraction when employment is harder to come by and college applications to come by and college applications have cooled off.have cooled off.
College EntryCollege Entry
© 2001 H.S. Dent Foundation
Workforce EntryWorkforce Entry
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
4,500,000
5,000,000
19
80
19
85
19
90
19
95
20
00
20
05
20
10
20
15
20
20
20
25
20
30
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
4,500,000
5,000,000
19
80
19
85
19
90
19
95
20
00
20
05
20
10
20
15
20
20
20
25
20
30
20 year olds-3yr lag20 year olds-3yr lag 63 year olds-No lag63 year olds-No lag
© 2001 H.S. Dent Foundation
Net Workforce ChangeNet Workforce Change
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
4,500,000
5,000,0001
98
0
19
85
19
90
19
95
20
00
20
05
20
10
20
15
20
20
20
25
20
30
Average workforce entry is moving Average workforce entry is moving forward about 1 year per decade because forward about 1 year per decade because more Americans are going to college. At more Americans are going to college. At the same time, Americans are working just the same time, Americans are working just a little bit longer, to about age 63. It is the a little bit longer, to about age 63. It is the net change of those entering the workforce, net change of those entering the workforce, with those retiring, that gives us this with those retiring, that gives us this measurement. measurement.
This measurement can be used to estimate This measurement can be used to estimate the long term trends of inflation. Inflation the long term trends of inflation. Inflation is caused by the inefficient addition of is caused by the inefficient addition of labor to the economy. When large numbers labor to the economy. When large numbers of young people enter the workforce, like of young people enter the workforce, like the 1970’s, they must be trained, set up the 1970’s, they must be trained, set up with equipment, and put into offices. It with equipment, and put into offices. It takes several years for them to become takes several years for them to become productive.productive. This measurement is also a factor in This measurement is also a factor in finding employment. It must be considered finding employment. It must be considered in light of the general state of the economy, in light of the general state of the economy, either expanding or contracting.either expanding or contracting.
© 2001 H.S. Dent Foundation
Multi-Family Housing/ApartmentsMulti-Family Housing/Apartments
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
4,500,000
5,000,00019
70
1975
1980
1985
1990
1995
2000
2005
2010
2015
2020
2025
2030
This is a function of the number of people This is a function of the number of people leaving home, and the number of people leaving home, and the number of people getting married. The average age of getting married. The average age of marriage is moving forward about one marriage is moving forward about one year per decade. It coincides with the year per decade. It coincides with the peak in shopping centers, as tenants peak in shopping centers, as tenants furnish their apartments.furnish their apartments.
This indicator is important not only for This indicator is important not only for those who are considering moving into those who are considering moving into multi-family housing, but also for those multi-family housing, but also for those who purchase them.who purchase them.
© 2001 H.S. Dent Foundation
Starter Homes/1Starter Homes/1stst Homes Homes
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
4,500,000
5,000,00019
80
1985
1990
1995
2000
2005
2010
2015
2020
2025
2030
That first home purchase is one of the That first home purchase is one of the biggest steps in our lives as biggest steps in our lives as consumers. It is the beginning of the consumers. It is the beginning of the American Dream. Demand for this American Dream. Demand for this peaks at around age 34, and, like peaks at around age 34, and, like workforce entry, is moving forward workforce entry, is moving forward slowly. This demand is what led to slowly. This demand is what led to the incredible run up in housing prices the incredible run up in housing prices during the 1980’s, which peaked during the 1980’s, which peaked around 1993-1994. This is exactly the around 1993-1994. This is exactly the time that many were concerned about time that many were concerned about the rising level of debt in America. the rising level of debt in America. However, a large portion of that debt However, a large portion of that debt was caused by nothing more than the was caused by nothing more than the Baby Boomers buying their first Baby Boomers buying their first home.home.
Things to consider here are the need Things to consider here are the need for first homes by family members, for first homes by family members, investments in homes in this range, investments in homes in this range, and the outlook for neighborhoods and the outlook for neighborhoods that are mostly composed of homes in that are mostly composed of homes in this range.this range.
© 2001 H.S. Dent Foundation
Trade-Up HomesTrade-Up Homes
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
4,500,000
5,000,00019
80
1985
1990
1995
2000
2005
2010
2015
2020
2025
2030
This is the industry that has driven our This is the industry that has driven our economy right through the recession of economy right through the recession of 2001. To the confusion of many an 2001. To the confusion of many an economist, housing starts and existing economist, housing starts and existing home sales remained strong during the home sales remained strong during the entire downturn of 2000-2001. This is entire downturn of 2000-2001. This is because Baby Boomers are currently in because Baby Boomers are currently in their peak years of demanding this class their peak years of demanding this class of home. Trade-Up Homes typically of home. Trade-Up Homes typically have a lot of square footage – over have a lot of square footage – over 3,000 square feet – and small yards.3,000 square feet – and small yards.
This is an area for caution. Many This is an area for caution. Many homeowners are counting on the values homeowners are counting on the values of their homes to increase at the same of their homes to increase at the same rate for another ten years. This would rate for another ten years. This would be improbable. It is most likely that, as be improbable. It is most likely that, as Boomers move beyond their peak Boomers move beyond their peak Trade-Up Home years, the demand will Trade-Up Home years, the demand will taper off and the market for this type of taper off and the market for this type of home will become sluggish.home will become sluggish.
© 2001 H.S. Dent Foundation
Peak SpendingPeak Spending
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
4,500,000
5,000,00019
80
1985
1990
1995
2000
2005
2010
2015
2020
2025
2030
This measure is the age at which the This measure is the age at which the average head of household spends the average head of household spends the most aggregate dollars per year. most aggregate dollars per year. Currently, it is age 47, moving forward Currently, it is age 47, moving forward about one year per decade. This is the about one year per decade. This is the point when the average first child is point when the average first child is about to enter college, and the Trade about to enter college, and the Trade Up Home is being renovated and Up Home is being renovated and furnished. Spending does not decrease furnished. Spending does not decrease because of a decrease in earnings. because of a decrease in earnings. Earnings, on average, continue to rise Earnings, on average, continue to rise until the early 50’s. Spending until the early 50’s. Spending decreases because of a lower level of decreases because of a lower level of need as children leave the home, and need as children leave the home, and savings for retirement increases.savings for retirement increases. This measure is an indicator of overall This measure is an indicator of overall economic activity. This can be used as economic activity. This can be used as a backdrop for all of the other a backdrop for all of the other indicators to gauge price levels and indicators to gauge price levels and corporate earnings.corporate earnings.
© 2001 H.S. Dent Foundation
Vacation Homes/Resort PropertyVacation Homes/Resort Property
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
4,500,000
5,000,00019
80
1985
1990
1995
2000
2005
2010
2015
2020
2025
2030
Not everyone buys a vacation home, Not everyone buys a vacation home, lake house, or resort property. But lake house, or resort property. But typically when they do, it is around typically when they do, it is around age 52. This is after several years of age 52. This is after several years of spending less money, yet having spending less money, yet having higher earnings. higher earnings.
Understanding this market allows you Understanding this market allows you to judge the best time to purchase such to judge the best time to purchase such property as well as the best time to property as well as the best time to sell.sell.
© 2001 H.S. Dent Foundation
Retirement HomesRetirement Homes
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
4,500,000
5,000,00019
80
1985
1990
1995
2000
2005
2010
2015
2020
2025
2030
The value of retirement property will The value of retirement property will increase dramatically as the Baby increase dramatically as the Baby Boomers reach retirement age. The Boomers reach retirement age. The peak of retirement age for Boomers peak of retirement age for Boomers will not come until the 2020’s so this will not come until the 2020’s so this market has quite a ways to go before market has quite a ways to go before the peak is reached. But already we the peak is reached. But already we are seeing retirement communities are seeing retirement communities growing at exponential rates as the growing at exponential rates as the first wave of Boomers move in. first wave of Boomers move in. Consider such property well in Consider such property well in advance of the peak.advance of the peak.