For homebuilders, this shift is significant and troubling. They can no longer make a profit off of small three-bedrooms homes. But what does this mean for real estate investors?
I have good news for you: this change is to our advantage. Think about this: just because Millennials aren’t actually purchasing small homes doesn’t mean that they don’t need to live in small homes.
They have to live somewhere. Some people might argue, “They’re all living in their parents’ basements,” but this is not inherently true. Many Millennials are renters. And if they’re going to rent, why shouldn’t they rent from you?
The other benefit for investors is that homebuilders have had to change their business model due to this change in the housing market. Since they’re no longer building small starter homes, they’re no longer competition for buy and hold real estate investors.