Lennar’s Next Gen Homes Set Sales Record as High Valley Rental Rates Affect Gen Z Population
By Alison M Walsh -
Tuesday Mar 14, 2023
As Gen Z deals with significant pandemic level rental rates, a record number of Arizona families have found Next Gen homes an alternative, leading to the largest sales jump in Lennar’s history.
As the nation’s largest homebuilder celebrates 50 years of doing business in Arizona, Lennar has typically seen its most popular Next Gen model account for 20-25% of all business, as the Next Gen allows families to live together, but with privacy for all.
In summer 2022, for the first time ever, these numbers hit 30-35%, with some communities greater than 35% of all homes sold. Due to this increase, Lennar is growing the number of Next Gen homes in its communities from 20-25% to 30-40% of total homes. Most communities are seeing this shift, such as Lennar’s Mystic, Copperleaf, Warner Ranch and Asante neighborhoods.
As the Gen Z population struggles with these prohibitive rental rates, buyers are seeking new ways to save on home purchases. Due to that, Lennar is seeing this major shift in the reason consumers are buying the Next Gen. Adult children moving back in with their parents is the quickest growing Next Gen demographic and at the highest percentage ever seen historically.
Consumers are purchasing Next Gen homes as a space for adult children returning to the nest or if they are unable to afford a home on their own. For many, the decision to buy this ‘home within a home’ is more of an economic decision.
“We have never seen Next Gen home sales in the 35% range,” says Alan Jones, Division President of Lennar. “It’s changing the way we are doing business and developing our new communities.”
Lennar’s statistics fall right in line with national figures. A 2022 study found that nearly half of all young adults are living at home in the U.S. – a historical high not seen since the Great Depression, according to the U.S. Census Bureau.
Analysts estimate that about 48% of young adults, between the ages of 18 and 29, are living with parents in 2022, due to factors like high rental rates.
The National Association of Realtors also found in its 2022 generational trends report that Gen Z makes up only about 2% of the buying market right now, while a 2021 Realtor.com survey found 72% of Gen Zers indicated they would like to buy a house in the future.
“As pricing and interest rates increase, we have seen more families combining resources to purchase a Next Gen home,” said Matt Wolf, Vice President Lennar Mortgage. “It helps with qualifying and monthly expenses based on combining incomes, property tax bills and insurance costs. We see many families with boomerang kids or aging parents strongly considering the Next Gen to solve their housing needs,” Wolf added.
Elan McMonigal’s family is one of those statistics. They purchased a Next Gen as their daughter is a teacher and couldn’t qualify to buy on her own.
“The Next Gen still allows our separate privacy, while helping our kids save money to make a better living,” McMonigal said. “We are so grateful the Next Gen exists for parents who want to help their kids move into home ownership.”
Lennar pioneered the Next Gen model in Phoenix in 2011. The Next Gen offers a private suite providing all the essentials multigenerational families need to work, learn, live and have a sense of independence.
In addition to living space for adult children, families use the Next Gen suites as home offices, classrooms and separate businesses.
The reasons consumers purchase a Next Gen change with the economy. Through the years, Lennar has seen it become more of a lifestyle purchase and then with the pandemic, more of a necessity. Today the main reason is an economic one, as adult children are paying off college debt or saving money for their own home. It’s an arrangement that’s financially feasible for adult children, while beneficial for parents.
“The Next Gen concept has expanded for us nationwide because of its ability to be self-evolving and fit so many needs,” added Jones. “Whether it’s due to constraints in the economy, a need for a home office, kids returning home or aging parents, consumers see the Next Gen model as a responsible way to manage most living conditions or economics.’
Lennar expects to see the trend last at least through 2023.