Buyers want smaller homes and urban life
The two largest groups of Americans, Gen Y and the baby boomers, both favor urban living. That, plus new economic realities, will change the future of real estate, a report says.
A conference last week in Dallas provided yet another piece of evidence that the real-estate market of the future is not going to be like the market of the past.
Putting another nail in the coffin of far-flung suburbs, the Urban Land Institute, drawing from a recent report, provided yet more evidence that future homebuyers will want something different.
The new homebuyer wants a smaller home in an urban area, as well as a shorter commute to work and smaller payments.
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"This is not just another real-estate cycle but a fundamental change," Maureen McAvey, executive vice president of policy and practice for the institute, told an audience in Oregon earlier this month.
Her talks in Dallas and in Portland, Ore., were based on the institute's report titled "What's Next? Real Estate in the New Economy," which the organization released last fall.
Here are some of the highlights:
- Rising commuting costs, both in money and in time, are increasing Americans' desires to live near restaurants, shops and services. That is especially true of the two largest groups: Generation Y and the baby boomers.
- Gen Y prefers a more urban environment and is willing to sacrifice space for a better location. Plus, lower incomes mean they need to find homes at lower rents and lower mortgage payments.
- Demand for larger homes and apartments will come from intergenerational families, as aging boomers are forced to live with their children or adult children are forced to continue living with parents. Friends and acquaintances also may chose communal living arrangements in larger spaces to save money.
- More people over 65 will choose to age in place or be forced to move in with relatives. Many of those who are free to move, like their Gen Y counterparts, favor smaller spaces in urban areas.
- More Americans will rent, either by choice or by necessity.
"Markets become ever more segmented and specialized — one size certainly no longer fits all," the report says in its conclusion.
"Housing demands diverge among splintering household types. Expanding cohorts like intergenerational families, single women living alone, Gen Y couples and boomer empty-nesters all pursue different lifestyles, while traditional nuclear families seem ever less dominant."
My wife and I are in our 40s and we live completely debt free. We own our house and cars outright. 1600 sq ft brick ranch, we clear less than $50,000 a year combined income. I learned my finances from my grandmother. She bought her first house during the depression and she had a saying. “I pay cash or I don't have it and mostly I don't have it ". Her house was even smaller than mine, she had a 2 bedroom house with 1 bath and she lived in that house until she passed in 1982. Live within your means or below your means. When you have a mortgage you are just renting your house from the bank. Work toward getting your house paid off as soon as possible. Consider buying a used car instead of new. Try never to use a credit card unless you can pay it off monthly. You should not borrow on the equity of your house. Houses were not meant to be piggy banks.
About Teresa Mears
Teresa Mears is a veteran journalist who has been interested in houses since her father took her to tax auctions to carry the cash at age 10. A former editor of The Miami Herald's Home & Design section, she lives in South Florida where, in addition to writing about real estate, she publishes Miami on the Cheap to help her neighbors adjust to the loss of 60% of their property value.
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