Holiday Hosting Shifts: Economic Pressures and Real Estate Implications

Rising food costs are forcing Americans to rethink traditional Thanksgiving plans. Thirty percent of households now plan simpler meals, and a similar share are shrinking guest lists. Grocery prices for staples like turkey and pumpkin pie have surged 31-54% since pre-pandemic levels, disproportionately affecting lower-income households and Gen Z, who report higher cost concerns and guest list cuts. Despite these adjustments, 75% of consumers still plan to gather, and the Deloitte Food Frugality Index shows a slight decline, suggesting tentative easing of frugality as consumer confidence stabilizes.

The strain on budgets is sharply divided by income. Lower-income households ($<50K) project a $651 average holiday gift spend, down $100 year-over-year, while higher-income groups ($≥100K) anticipate $1,479-up from $1,403. This divergence reflects broader economic pressures: while affluent households leverage stock market gains to sustain spending, lower-income families face tighter margins, cutting discretionary expenses. Even with these trade-offs, overall holiday spending remains stable at $1,007 per consumer, underpinning a 4-5% retail sales growth outlook.

That said, frugality trends may linger.

The lingering impact of inflation on staple food costs and uneven income growth leaves lower-income households vulnerable to further reductions if economic conditions worsen. Meanwhile, higher-income groups face no clear ceiling on spending, though their ability to absorb volatility could be tested by broader market shifts.

Generational Redefinition of Living Space Requirements

A Realtor.com survey reveals that 52% of U.S. homebuyers prioritize hosting space for holidays like Thanksgiving, with younger generations (Gen Z and millennials) most influenced, as 60% cite this factor.

Key desired features include large kitchens (92%), guest bathrooms (87%), and spacious dining areas (86%), underscoring that functional space outweighs luxury appliances.

This preference also reflects a shift in priorities, with 45% of homebuyers favoring extra bathrooms over bedrooms (44%). This trade-off may disadvantage families needing additional sleeping quarters.

The trend is reshaping real estate demand and impacting housing values.

Market Risks and Demographic Vulnerabilities

Despite broader retail stability, economic stress is fraying the housing market's foundation. Gallup data shows a sharp divide in consumer confidence and spending power, with lower-income households significantly pulling back on discretionary purchases. This income gap is fracturing housing preferences, as affordability constraints push cost-sensitive demographics toward smaller, more functional spaces while wealthier buyers maintain demand for larger, premium properties. The resulting polarization limits overall market volume and slows inventory turnover in mid-tier segments.

Gen Z's evolving priorities further dampen demand for traditional large homes. Evidence shows this generation is already scaling back social gatherings-cutting Thanksgiving guest lists by 30%-reflecting broader caution around fixed costs. With housing representing the largest recurring expense for most households, younger consumers increasingly prioritize flexibility over space, favoring smaller units or shared housing models. Their heightened sensitivity to cost spikes compounds the challenge; grocery prices for staples like turkey and pumpkin pie have jumped 31-54% since pre-pandemic levels, eroding disposable income and delaying major purchases like down payments.

Food cost surges also threaten discretionary upgrades within existing homes. As households absorb 31-54% higher grocery bills, funds previously allocated for kitchen remodels, outdoor living spaces, or luxury renovations face compression. This frugality restraint extends beyond essentials: Deloitte notes tentative easing in consumer caution, but the 75% of households still planning gatherings suggests underlying financial strain persists. For housing markets, this means slowdowns in secondary purchases-where upgrades typically occur-and increased pressure on sellers to reduce asking prices or absorb closing costs.

The demographic shift toward smaller households, accelerated by Gen Z's cost-conscious behavior, creates a mismatch in supply. Existing inventory leans heavily toward larger homes built before 2010, while new construction remains skewed toward premium, multi-bedroom models catering to wealthier buyers. This imbalance could persist if income disparities widen, leaving moderate-income households trapped in undersized living situations. While overall retail sales show 4-5% growth, that stability masks deepening vulnerability at the lower income tiers, where holiday spending cuts of $100 year-over-year signal constrained liquidity. For real estate stakeholders, this environment demands targeted strategies-such as incentivized move-up programs or flexible financing-not just broader market optimism.