Editor’s Note: This is part one in a three-part series reviewing our RESET housing study. Read part two of the series here and part three here. After six years of decline, the nation’s housing market is making a slow but steady comeback. Many of us were interested in what the future housing market would look even before the recession, but with the market alive and kicking again, that question is all the more important. While nobody has a crystal ball, there have been signs for some time that things are changing – that the future won’t look quite like the past. Data from several sources, including the National Association of Realtors, Robert Charles Lesser Co., the Urban Land Institute, the University of Utah, the Demand Institute, and suggest that the market is shifting in response to economic and demographic trends, as well as changing consumer preferences and expectations. We’ve followed these trends with interest over the years, in part because we are kind of nerdy but also because they are highly relevant to the community development projects we do with local partners, and we’ve often wondered if the same trends we see nationally hold true in communities around the Rocky Mountain West. So, last year we commissioned Economic Planning Systems, a firm that specializes in real estate economics, to assess the future of housing in six communities that are representative of the West as a whole.
Several other studies, including the National Association of Realtors 2011 Consumer Preference Survey, indicated that there is a growing consumer appetite for compact walkable development, so we were particularly interested in whether that same trend is occurring in the Rockies and if so, what does it look like, and how well are communities positioned to respond? Our approach was two-fold. The really geeky members of the team wanted hard and fast numbers (aka market data) to see how compact walkable development performs from a dollars and cents perspective. So the study looked at market capture and price premiums using MLS and building permit data to see whether compact walkable had established itself in the market and how well it was performing. But we also wanted to hear from residents about what they are looking for, so the study also included a survey to explore basic preferences regarding where people want to live and the qualities they are seeking in a home, neighborhood, and community. We asked several of the same questions used in the National Association of Realtors 2011 Consumer Preference Survey, allowing us to compare regional and national results. If you made it this far, you are probably wanting some results. Well, the whole report is available on this site, right here, but in this blog, and over the next few weeks, I’ll be exploring some of the findings and taking a closer look at what this means for our region. The market is changing. The market is getting more complex in response to changing economic and demographic conditions. Different people want different things. For some, the American Dream is a big house on the hill, and for others it’s a loft downtown. The future housing market will reflect the different lifestyle choices of various demographic groups, particularly Generation Y and Baby Boomers. Walkable neighborhoods are in demand. A growing number of people do want to live in walkable neighborhoods, and they are willing make trade-offs on other factors such as lot size, to do so. Oh yes, in most markets people will also pay more per square foot to live in a walkable neighborhood. Detached single family homes are still the most popular housing option, but a significant number of people are also interested in attached housing that is walkable to downtown or town-center. In most communities, those core areas also capture a price premium. Home and lot size matter, but not as much as location and neighborhood character. Many people will trade lot size to live near daily needs like schools and store, as well as amenities like parks, trails and recreation. There are some teasers for you. Again, we’ll dig into details in the coming weeks. In the meantime, check out the study (download here) and stay tuned. We look forward to hearing what you think. This study is a start – it really just scratches the surface, but hopefully it adds to the dialogue about how our communities can respond to and take advantage of changing market and economic realities.
Projects & Programs