Mega Trends in Demographics and Economy Driving Housing Decisions
At a recent seminar for builders and realtors sponsored in part by the BIA of Central Ohio, Stewart Title’s Chief Economist Ted C. Jones, Ph.D. focused on mega trends facing central Ohio that local governments should take note of. In part, these included:
• More Jobs Than Ever in History – both nationally and locally
• Retail Boom Just Starting
• Entry Level Homebuyers Returning
• Residential Renting vs. Owning
The US Bureau of Labor Statistics reported 3.296 million jobs were created in the past 12-months, pushing US total employment toward 141 million for the first time. Dr. Jones reported that Columbus metro jobs are approaching 1 million. This is helping to drive the other 3 bullets points above as Millennials are finding employment in better paying positions buying homes, renting and buying products to support household formations. This could have large implications for local governments and housing and land use policies, as the need for entry level and affordable housing has not even been a topic of discussion in most planning commissions and city councils of late. Along with this trend, many of the huge Baby Boom population will seek to “cash out” and leave their traditional, large lot, single family suburban home and seek alternative, empty-nester, senior and assisted living housing in huge numbers in the coming decade. The 50-plus group already makes up over one-third of the U.S. population. Many of these folks will try to find alternative housing and a maintenance-free lifestyle to accommodate their most important challenge – finding more time. More affordable and smaller houses, rentals, condominiums, townhomes, multi-family units of all types will be, and are, in demand.
What Boomers will not likely drive is much more demand for large lot, traditional, single-family homes. Builders and local planners take note: some suburban communities in central Ohio have existing housing stock that approaches 90% traditional, large-lot single-family housing, and these homes are occupied by many people in their late 40s, early 50s and 60s. The prospect of many of these folks trying to downsize during the same time period is a little frightening in terms of supply, demand and the implications on values. For these folks to successfully “cash out” of their traditional family home, and to find other acceptable places to live in their own communities two things must change from the current reality. First, the importance of allowing the Millennials to buy entry level homes in these communities, to build equity and ties, or to find acceptable rental options that allow them to create roots in a community and save money to become the future move-up buyers of the Baby Boomers existing McMansions must be recognized. The housing market has always counted on a “farm system” of buyers moving up as they build equity. Boomers cannot afford to have Millennials not show up! Second, planners and decision makers must recognize that future housing needs are very diverse, with many options needed, including luxury rental, affordable rental, assisted living, retirement living, and entry level housing.
What happens if Baby Boomers want to sell and Millenials cannot buy? What happens if Baby Boomers want different housing options in their own community but the need is not met? The answer is: some communities will recognize and plan for these trends, and align their community vision with them. Their housing markets will be healthier, with a progression of housing choices allowing people to thrive in the community they choose to or did put down roots. Some communities may have too much traditional, large-lot, single-family housing ALREADY for this housing to maintain its value based on market dynamics, but action and policy decisions matter. As a zoning lawyer in the housing industry, I can see that leadership also matters. Getting analysis and facts out in public, speaking to community residents about their fears and concerns about housing values and creating consensus for future success are critical in this area.