Valets at the W Hotel were scrambling this morning at 7:30 a.m. when a rush of sleek cars and black suited commercial real estate types descended. The Urban Land Institute, a Washington, D.C.-based commercial real estate development, planning and research group was in town talking about the markets and what we can expect in the future. When it comes to housing, smaller homes closer to urban areas will be hot for new construction, as post-bubble buyers seek smaller mortgage payments and shortened commutes to relieve them from what we are going to see very soon: $5 a gallon gas.
Keynote speaker Maureen McAvey, executive vice president of policy & practice for U.L.I, says urban appeal may temper suburban sprawl because of the burst of mixed-use and rental properties going up near the urban core, something we are seeing a lot of in Dallas. Apartments, she said, are on the rise and home ownership is falling. We are becoming a nation of renters, in more than just our homes. The glamour of living in an urban center draws the “tribe” and cuts down commute time to work and play, making it entirely possible to live New York City-style and shed a car. McAvey said the burgeoning Gen Y will be increasingly drawn to urban areas and smaller homes. As Lucy Billingsley put it later in a break-out session, “they don’t want the silver.”
Home sales will be tempered by dwindling mobility when couples have a tough time, for example, finding two jobs in the same city. This group will stay in their homes for a longer period of time. We will see many changes in the way we live outside of the box of the two parent, two child one-generational family: homes are becoming multigenerational to accommodate aging parents or adult children who have not yet left the nest. Think about that the next time you see a home with two master suites. Meantime, the average size of homes is predicted to shrink by 20% in coming years because of increased maintenance costs.
One thing we can count on: taxes and energy costs will go up up up.
The biggest take-aways from a great morning:
– The current world market change is different from any other. We are not going back to the old ways.
– Watch these two demographics — Gen Y at 85 million strong, and Boomers at 81 million strong. Both are changing attitudes towards home ownership.
-In 1945 there were 42 workers for every retiree
-In 2009 there are 3 workers for every retiree
-Boomers are re-planning their second phase of life right about now and experiencing second adulthoods
-The shift to a global economy is as significant and dramatic as the shift from agrarian to industrialization.
-This is not just a business cycle, it’s a major reset of the world economy.
-Demands and desires for all kinds of real estate have changed and the industry must adapt.
– It may no longer be location, location, location but who has the very best internet connection for your iPhone from the office to the elevator.
– (Hint, W folks: I couldn’t get a signal to Tweet!)
– Workers and residents are as concerned about the style and layout of the property as they are where it is located.
– We are down to 66% home ownership and shrinking to 63%, U.L.I. predicts. There are over 4.3 million turning 21 every year
-Homes will be smaller and more multi- generational, also more conveniently hooked to transit
-This generation of kids likes being close to their parents!
-Housing demand will be up increasingly for rentals
-For every car you do not need to own you save $8000 to $10000 a year, maybe can put that back into housing?
-Smaller is beautiful: we will see new homes averaging 2100 square feet and getting more modest
-Office space per employee will shrink considerably
-Retail: internet sales will dominate while the middle is cut out. It’s all about bricks and clicks.