Demographic Trends and How They will Affect Real Estate
Emerging trends in demographics and consumer behavior will become major drivers of new housing opportunities, resulting in a residential market vastly different from the one that existed prior to the recession, according to Housing in America: The Next Decade, a new research paper authored by John K. McIlwain, senior resident fellow, Urban Land Institute/J. Ronald Terwilliger Chair for Housing.
The rising numbers of foreclosures, re-establishing a private-market residential finance system, shifts in housing demand triggered by baby boomers, their children, and by immigrant households will all have profound effects on our real estate picture. “The old ‘normal’ will not return,” McIlwain predicted. “Over time, a new mode of metropolitan development will emerge, presenting opportunities and stiff challenges. Those who fail to understand these new trends will find themselves building what is no longer in demand.”
He predicts a further 10% drop in housing prices nationwide this year, which will contribute the the already high number of foreclosures and short sales. As reported by RisMedia, McIlwain suggests that "The growing number of consumers who are choosing to walk away from those mortgages suggests a fundamental change from the long-held notion of homeownership as the ultimate American Dream. This disillusionment over homeownership as a way to build wealth could persist for decades to come, as those entering the housing market will be more apt to rent longer, and to place more emphasis on buying for shelter rather than investment purposes."
Key indicators of this trend, as predicted by Housing in America, will be slower growth in home appreciation, to about 1-2% annually, and a decline in the U.S. homeownership rate, from 67% now to about 62%.
4 Major Demographic Shifts Predicted by the Report
1. Aging baby boomers, 55-64 - will keep working out of necessity or choice. Those who decide to move will choose mixed-age living environments with opportunities for active lifestyles.
2. Younger baby boomers, 46-54 - entering their prime earning years, will not be able to sell as easily and so won't move as readily. Their ability to purchase 2nd homes will be diminished. They will be drawn to more connected, compactly-designed communities.
3. Generation Y - the tech-savvy generation is larger than the BabyBoomers. They value community, places to gather and share information and ideas. They will have less interest in home ownership than their parents, and will want walkable, close-in locations.
4. Immigrants - already total 40 million, and their impact is huge when the extended families of grandparents, children, grandchildren are included. They tend to cluster, live in multi-generational housing, and also want a strong sense of community.
McIlwain summarizes the report: "Economic and land constraints make it impossible for urban infill development to accommodate all the housing demand represented by all the demographic groups. As a result, suburban development 'must adapt or it will be obsolete,' he concluded. 'The suburban century is over. This is the urban century.'
Read more about the shift in housing trends in the country at RisMedia.
Contact me to discuss these ideas and how you can find a place you value and find comfortable in the Daytona Beach area.
Sherry Armstrong, Realtor
386-679-3191
yourkeytothebeach@gmail.com
www.sherryarmstrong.com