The Housing Chronicles Blog: Households Re-Think the Meaning of Home

Monday, December 19, 2011

Households Re-Think the Meaning of Home

At the 2011 ULI Fall Meeting in Los Angeles, a new publication entitled “What’s Next: Real Estate in the New Economy” summarizes what builders and developers can expect in the years ahead through 2020. Due to a combination of increasing globalization, changing demographics and evolving technologies, the correct mix of strategic analysis and advice has never been more important.

In the short term, one thing is becoming clear: the smorgasbord of low-hanging fruit which largely powered the home building industry’s success since the end of World War II is now gone. But that’s not necessarily a bad thing. In its place is emerging a collection of specific opportunities targeting value-conscious Baby Boomers, hyper-connected Gen Y members, immigrants often in need of multi-generational housing and lifelong renters -- some of whom need affordable housing and others who still crave those services and amenities commonly found in luxury condominium buildings.

However, these groups will still demand some common traits related to design and function. One major trend discussed at the 2011 Building Industry Show in Southern California is casual living, which is now evident in all facets of American life and has been building for the last two decades. Casual living means combining room flexibility into ‘great rooms’ so individual households can make it their own with the fewest structural impediments as possible. At the same time, today’s households don’t want to sacrifice style and design, so matching supply to demand at a competitive price will be critical.

It also means providing a clear relationship between indoor and outdoor spaces, so that even downsizing Boomers or transit-oriented Gen Yers can host family and friends in a yard or on a patio or balcony. In addition, given the continued rise of telecommuting marching in lockstep with improving technology, most buyers want to feel just as connected with the outside world whether they’re living in a downtown loft or a multi-generational home in a far-flung suburb. And, although today’s buyers and renters won’t necessarily pay more for sustainable living, they’re much more likely to opt for a green home if the cost is the same, thus helping both absorption and occupancy levels.

The demographic changes impacting the industry will continue to accelerate in the years ahead, which will mean building for single-person households (expected to account for 27% of the total by 2020), ‘minority majority’ Asian, Hispanic and African American communities in many urban areas, extended employment years for Baby Boomers expected to live longer lives than ever, and small groups such as families, friends and roommates opting to cohabitate in large homes as opposed to living alone.

Layered on top of these demographic changes will be the realities of living a balanced life. With costs for transportation in the form of fuel, time and tolls continuing to rise, households are already beginning to factor in the total cost of commuting and maintaining a home into their total monthly budget. However, since infill urban locations are by nature limited in scope, look for more mixed-use corridors to crop up around suburban nodes with freeway interchanges and transit stops as the center piece.

Still, beyond the statistics lie the real reasons people choose the communities in which they live, and some of these may surprise. According to the third annual Knight Soul of the Community survey conducted by Gallup, there are three main qualities which attach people to a place: social offerings in the form of venues and places to meet, openness to diversity and newcomers, and aesthetics in both physical beauty and green spaces. Perhaps Confucius had it right all along when he predicted, “The strength of a nation derives from the integrity of the home.”

No comments: