Pd0809 Tomorrows Home Buyer


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This article reviews recent research into the desires of homebuyers, with particular emphasis on demographic shifts.

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Pd0809 Tomorrows Home Buyer

  1. 1. Tomorrow’s Home Buyer By Michael Stumpf, September 2008 A merica has been in a housing slump for cycle, many of them own homes. As they sell they more than two years. While waiting for it will be adding an enormous inventory of existing to bottom out it may be worth our time to housing to the market. There are fewer buyers in look ahead and speculate on changes we may to Generations X and Y, which has led some people see coming. Our notion of the American Dream is to expect a glut of homes for sale. Further compli- quickly being eroded by rising energy costs and cating the issue, Generation X and Y buyers do not generational preferences. These changes will im- want the same house as did the previous genera- pact both builders and communities as we climb tions. Their preferences vary, but a majority favor our way back to a healthy housing market. smaller homes with better quality finishes instead of a large home. They also prefer active mixed-use Perhaps there is no greater threat to housing price neighborhoods instead of suburban tracts and stability than the coming Boomer Sell-Off. Much has been made of the fact that the first baby boomers are entering retirement, but that has not included much discussion about housing. As boomers retire they will be selling their homes to move into their final home. Research shows that a majority of these newly retired boomers will not be attracted to age-restricted retirement communi- ties, or even be as inclined to move to the south, as did their parents. Instead, most boomers will prefer a detached home or condominium, often as large as the home they are leaving. A look at many new developments shows that developers are al- ready responding to this demand. But boomers are also the largest age cohort in the U.S. population, and at this point in the housing Place Dynamics Michael Stumpf is a consultant in community planning, economic development, and 1 market analysis, based in New Berlin, Wisconsin.
  2. 2. large lots. As a result, many boomer homes, espe- veloping new housing for current and future gen- cially in slow-growing parts of the country, may erations. O lose value or linger on the market. High energy costs are a more recent part of the © 2008 Place Dynamics equation. At the end of June in 2005, just before the housing market began to falter, the price of gas was $2.21 per gallon. At that time, a median-wage worker in the United States, commuting to work the average distance, and having a car with aver- age fuel economy would expect to spend about $0000, or 00 percent of their income on gas just for travel to and from work. At four dollars per gallon that amount has increased to $0000, or 00 percent of the worker’s income. These and other rising costs are causing many buyers to rethink where they are willing to live. Perceptions that the same money will buy more home at the urban fringe are breaking down. What should we expect when the economy im- proves and people again start to buy homes? The trends we are looking at suggest that locations close to concentrations of employment will fare better than rural areas or the urban fringe. Urban locations offering convenient or walkable access to shopping, restaurants, and entertainment may also be popular choices, including the revitalized downtowns of smaller communities along with urban neighborhoods. This may lead to a surge in redevelopment and infill projects, spurring eco- nomic revitalization. In short, the housing market may look very differ- ent on the other side of the trough. There will be challenges, but also opportunities to continue de- Place Dynamics 2