Just gonna jump right into this:
Gen Z will have a harder time getting a house than the Millennials did. They are the biggest generation ever. They will be entering the real estate market at about the time Millennials are selling their starter homes. Great news if you own a 1300 square foot house in Masterson. Times will be tough for them, but they will keep the market going strong. Every seller of a starter home needs a first time buyer so they can move up. That first time buyer is the oil that lubricates the whole market.
The Millennials will be moving up to their 4 bedroom houses on a cul de sac in a good school district because that is just a natural progression once you start a family. This is great news for Gen X sellers who will be downsizing to medium sized houses in upscale neighborhoods.
What makes me think all this? It’s not really crystal ball as much as it is history. Everything I just described happens with every generation. You buy a smaller house you eventually outgrow, you move up at least once to the house you raise your family in, then you downsize.
So what does all this look like for Lexington? More gentrification as it becomes expensive to live anywhere in Fayette County. I know it sounds unheard of, but the neighborhoods that nobody wants to live in like Cardinal Valley and Winburn may become the budget choice as similar neighborhoods with better locations become too expensive. I know it sounds crazy, but when I was in high school, people didn’t want to live in Kenwick and now those houses equal Chevy Chase for price per square foot……yesterday’s bad neighborhood can easily become a tomorrow’s good location. Plus, it isn’t like we are ever going to see brand new starter homes ever again. All that can be done is update/remodel existing houses. The people that flip houses need some margin to do this so they will buy distressed houses in whatever neighborhoods are affordable, just like they are doing now in downtown, Melrose, The Meadows and all those streets that begin with D around Pasta Garage.
Before long, I don’t think there will be any new construction in Lexington. We are already filling in every spot big enough to stick a short row of townhouses. This means that being in Fayette County will be even more expensive, and people will go to surrounding towns like Nicholasville and Georgetown even more. One day, people will discover that Winchester is only 15 minutes from Hamburg and the interstate passes right through it. I’ve never understood why more people don’t move to Winchester?
Remodeling will be hot too. With not much new construction, people will start remodeling existing houses more and more.
Sort of some majorly huge economic melt down, I think housing is going to be strong for quite some time.