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Today’s demographic and economic conditions, along with consumer preferences, are creating a major shift in housing demand. The time is ripe to for communities to develop housing strategies that address these changes.
articles by Beth Humstone, Wendy Grey, and Edward McMahon; from PCJ #78 (Spring 2010); 4 pages -- see our conversations with Beth Humstone and with Wendy Grey, two of our new contributing writers. Read excerpts below; to order & download the full articles use Shopping Cart button at bottom of this post. |
First part of article by Beth Humstone: Future Housing Demand -- Problem or Opportunity
How many times has your commission heard, "But there's no market for that development," "People want a big home on one acre," or "It's more affordable to buy a house out in the country?" In the past it was commonly accepted that suburban or fringe housing on large lots was where most of the housing market was focused. But the recent housing foreclosure crisis, coupled with high unemployment and rising energy costs, has challenged old assumptions and dramatically altered the picture. Now planners in communities across the country are increasingly hearing different demands for: more housing close to transit; walkable neighborhoods; and affordable, low-maintenance, energy-efficient homes. In this chaotic time, how do citizen and professional planners determine what people really want or need, and what to plan for? It is essential that planners understand the market for housing in their community: what types (and price ranges) are needed, and in what locations. Planners must also consider economic trends and other factors that could impact future demand. Today's demographic and economic conditions, along with consumer preferences, are converging to create a major shift in housing demand. The time is ripe to plan for future needs. Economic forecasts suggest that there will not be much action on homebuilding for about two years. Many communities currently have excess housing stock that very likely will be filled before much new construction begins. So there is time to examine residential markets and how they are changing to avoid housing shortages, meet community needs and revitalize neighborhoods stricken by economic conditions. Demographic Trends Two national trends are clear: (1) decreasing household size, and (2) an aging population. Once planners focused their housing plans on providing for couples with children. Now these households are a minority. As Arthur C. Nelson, Director of the Metropolitan Research Center at the University of Utah, recently noted that: "Between 1950 and 2000, average household size decreased from 3.38 to 2.59 [and] will continue to fall to about 2.46 persons by 2030 ... Single-person households will rival households with children and will be the fastest-growing market segment." Moreover, as Nelson explains, "Baby boomers will turn 65 between 2011 and 2029. Large homes in outlying locations may no longer be affordable or practical for retired people. According to a report published by the Urban Land Institute, "Some baby boomers will choose to downsize to an apartment or condominium after their children leave the 'nest'... Multifamily housing allows seniors to remain in their neighborhoods through the different stages of their lives without the hassle of maintaining single-family housing." ... article continues with look at Economic Conditions and Consumer Preferences First part of article by Wendy Grey, AICP: Perspectives on Housing Historically, the purchase of a house has been the single largest investment most families make. People select a new house based on criteria such as affordability, whether it is in a good school district, and whether they feel comfortable with the neighbors and neighborhood. In recent years another factor was also added to the mix: the assumption that, almost regardless of the choice they made, the house purchased would increase in value. With the end of the housing bubble, this is no longer the case. It is important to remember that there are also broad demographic patterns that influence the demand for housing, the most significant being migration, immigration, and age. Migration. We have historically been a mobile society. We move to pursue better opportunities. The huge migration to the Sunbelt over the past 25 years is a recent example of this pattern. Immigration. Much of our population growth is coming from immigration. Between 2000 and 2007, the immigrant population grew by 22 percent, to 38 million . While the majority of immigrants have historically lived in once mostly lived in central cities, many immigrants now live in suburbs and rural areas. Age. The most significant age group in terms of numbers is the Baby Boomer generation -- born between 1946 and 1964. Having been the driving force behind the expansion of suburban living, Boomers were expected to sell their homes and relocate to popular retirements areas. Gen Xers, born between 1965 and 1980, are now the prime market for family oriented homes. However, Gen Xers have had to deal with a higher cost of living over the past decade, and have often found themselves priced out of the housing market as they've tried to move up the property ladder -- especially as more Boomers have stayed put. The crash in the housing market and the recession have affected the anticipated trends in migration and immigration and people's housing options in the short term. With unemployment and foreclosures up and mortgage lending restricted, people are not relocating, and the buying and selling of houses is down. Immigration has also slowed. One key role for planners and planning commissioners is to consider strategies that will help recreate viable neighborhoods for current and future residents. This will involve reconsidering land use patterns, particularly in suburban areas, where the recovery in the housing market is expected to lag. ... article continues First part of article by Edward McMahon: Perspectives on Housing Back in July, Builder Magazine published an article titled "Brave New World: After the Bust, Builders Might Be Surprised at What Future Shoppers Will Want," by John Caufield, Jenny Sullivan, and Nigel Maynard. To gather data for this piece, the magazine commissioned American Lives, a California-based market research firm run by pollster Brooke Warrick, to conduct a nationwide study of prospective homebuyers' attitudes toward the economy, home styles, product preferences, energy efficiency, and green features. It also examined changing attitudes in regard to the role of the home and the imp act of demographic changes on buyer preferences. The results are surprising and they suggest that the types of new homes that were most prevalent before the recession will not satisfy the needs of tomorrow's buyers. One reason for shifting buyer preferences is the fact that there are so many different buyer profiles. Tomorrow's market is made for the foreseeable future. So what do buyers want? Given that housing prices are down 30 percent from their peak -- and even more in some markets -- big, flashy houses are no longer priorities. Buyers are less likely to think of housing primarily as an investment and more likely to think about how the house will fit their lifestyle. What is more, for many buyers the character of the neighborhood is more important than the size of the house. In fact, more than 50 percent of respondents in the survey said they were willing to accept a smaller house "in the neighborhood I want." This does not mean product is irrelevant, but it does mean that for many buyers the location of the home -- the place -- is now more important than the house itself -- the product. According to Builder, one subset of buyers that homebuilders should learn more about is women. Women have always played a big role in homebuying decisions, but demographic data show that by 2010 households headed by a woman will number well over 30 million. ... article continues The three full articles can be ordered & downloaded. Click lightning bolt icon at top left of this page. |
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