Generation Y and Boomers are both challenging assumptions about the primacy of suburban homeownership, according to a panel convened by the ULI Terwilliger Center for Housing. More than ever, renters and homebuyers are focusing on a sense of place and amenities rather than on the size of their homes.
Much remains unclear, however.
“There’s so much uncertainty at so many levels,” began moderator John McIlwain at the June forum. “We’re going through an unprecedented recession; you have to look back to the 1930s before you [see] anything that looks like what we’re going through now, yet there are distinct differences,” including major cultural and demographic shifts.
McIlwain said that Gen Y brings different expectations of housing: “They don’t look to live in their home so much as they’re looking to live out of their home; home is a place to come back to.”
Perhaps as their parents become empty nesters and look toward retirement, they, too, are beginning to think about home in very different ways, said McIlwain, who is a ULI senior resident fellow and J. Ronald Terwilliger Chair.
Noting that “an apartment is also a home” and reviewing why we can expect to experience a sluggish recovery in the “house ownership” market, Doug Bibby, president of the National Multi Housing Council (NMHC), said that the prime reason that the homeownership market will not “come roaring back anytime soon” is that today’s young consumers understand that “mobility is king in a weak and recovering job market.”
Rather than predicting the future, Bibby asked a series of questions that all residential developers should consider: What will the “psychological hangover” of the Great Recession be on attitudes toward homeownership? Is renting becoming more acceptable? How long will underwriting remain as tight as it is today? And will minority households—who make up 70 percent of future demand—make the same housing choices as others?
Despite these unanswered questions, Bibby remains optimistic about the future of the housing industry, noting that he thinks this is “a very exciting time, one, when we can get out of the box we’ve been in for a long time to create new approaches and new solutions.”
Jason Jordan, director of policy and government affairs for the American Planning Association, focused on the importance of investing in place, noting that today’s consumers want to live in communities that offer energy-efficient homes, sidewalks, transit, locally owned businesses nearby, the ability to age in place, and a mix of housing choices and price ranges. These types of communities are attractive to both members of Gen Y and seniors—the two largest demographic groups today.
“While we think of these generations as very different, in fact, the implication for communities is that they’re very much the same,” Jordan proposed. How do we reconnect housing policy—which largely remains geared toward creating traditional suburban postwar housing—with the realities facing the market today?
Jordan suggested a number of steps, including integrating location criteria into housing policy (particularly housing subsidy programs), dramatically increasing investment in community development (while linking those programs more substantively to housing outcomes), more aggressively reforming local codes and devising policies to promote infill development and redevelopment projects, learning some useful lessons from infrastructure finance techniques, and developing broader metrics that ultimately will lead to better policy decisions.
Brian “A.J.” Jackson, senior vice president with EYA, a developer of innovative urban-style, transit-accessible infill housing in the Washington, D.C. area—and, more specifically, in locations that offer what EYA calls “life within walking distance”—shared some of his company’s experiences, noting that the Washington area’s strong housing market may be seen as “a glimpse of where the rest of the world will be as the market stabilizes.”
What EYA is finding, he noted, is interest from both young professional and empty nester buyers, primarily couples, who may commute to their jobs by car but don’t want to have to use their cars in the evenings or on weekends to get to shops, restaurants, entertainment, and so forth. With interest rates low, these buyers can afford to spend more for a home, but rather than buying larger units they are focusing on custom features and options.
Permitting fees, high land and construction costs, and other expenses are making it even harder for developers to build affordable housing, said Jackson. And although local governments may be talking about important issues like locating more housing near jobs and transit, meeting the demand for workforce housing, and so forth, they have not been willing to stand up to community opposition in support of those issues, he added.
Laura Cole, vice president of marketing for Willowsford, a master-planned community (MPC) being developed in Loudoun County, Virginia—a rapidly growing outer-ring suburb—shared her company’s experiences and perspectives in building a new 4,000-acre MPC, stressing that “we still need to think about suburban areas, about how to reinvent them and create community in a different fashion.”
The goal at Willowsford is to create a sense of place that builds on the area’s strong agricultural heritage as well as a growing interest in local, organic foods. The centerpiece of the community is a 2,000-acre working farm operated by a nonprofit conservancy, which is supplemented by an extensive trail system that links neighborhoods to the farm and other community amenities, and a set of architectural guidelines that ensure high-quality building. The community is attracting local move-up buyers—who are choosing homes with higher-end finishes and more flexible floor plans rather than larger ones—as well as families with young children moving from inner-ring suburbs for the county’s well-regarded schools and empty-nester couples looking for a community in which they can connect with their neighbors in more meaningful ways.
In closing, McIlwain commented that what residential developers will see as we head into the future is “not one market, not one thing. It’s going to be lots of things, which means lots of opportunities for developers and others to find market niches that others don’t see. Don’t look for the market, look for a market.”
“The challenge from a broader planning point of view will be how to help facilitate the development” of new and different types of housing and communities that will meet the needs of those market, Jordan said, adding that he’s optimistic that the current housing crises are forcing conversations like this to also take place outside the development and housing communities.
Jordan noted that the finance sector, in particular, has to become part of the solution by getting out of the traditional ways that they’ve approached this problem. “As government and other fields wake up to the fact that there’s a problem, and as the finance community comes to the table,” he said, opportunities “to be much more creative than we have been” will arise.
Read more about the June 2012 ULI Terwilliger Center for Housing forum: Solo Cities: How “Living Alone” Is Changing Urban America.