In our discussions on the next-generation way to invest and the millennials megatrend, we’ve talked about the opportunities in social media and mobile lifestyle. Another area of the economy that this sweeping demographic will have a major impact on is the housing market.
One out of every three homebuyers this year will be a millennial, equating to about 1.9 million homes, and it won’t stop there. This age group tends to settle down later in life and wait to start families, so the oldest is just now reaching that point. They will account for 80% of all births this year – and that’s just the tip of the millennial iceberg. This creates a perfect storm of demand not just for homes, but bigger homes as their household needs increase.
This is another area where our next-gen way of investing leads us to multiple opportunities in real estate as well as homebuilders and materials companies. That puts the iShares Dow Jones US Home Construction ETF (ITB) and PowerShares Dynamic Building & Construction ETF (PKB) on my short list. They consist primarily of homebuilders but also building products and even home improvement stores. The influx of millennials buying homes at a time when they are still affordable with low interest rates will boost the sector and these broad ETFs.
And once those homes are built, millennials will be itching to decorate in their signature fashion. I’ll give you one guess where they will find it – online! That makes Wayfair (W) an attractive stock. Through its own website as well as online retail partners, Wayfair offers nearly seven million products for the home from over 7,000 suppliers. The company prides itself on its online shopping convenience and affordable prices, two things we know are a hit with millennials. This combination has led to strong growth over the years, and expectations are for 25% sales growth in each of the next two quarters, putting the company on the verge of $1 billion in quarterly sales.
You can see how many different areas of housing millennials can impact – and all this from a demographic known for not leaving the nest! It may happen a little later in life for them, but we’re seeing the snowball effect starting now – and it’s one you don’t want to miss out on.