The following are some recent facts and events that begin to illustrate the new reality of housing- that the majority of new construction will be multi-family, smaller and in cities.

New American Lifestyles

• There are two million  more adults ages 18-34 living under their parents roof last year than four years ago.
• 80 percent of units now have one bedroom. In the past, 60 percent had two bedrooms
• New units are as small as 500 square feet in Houston, even smaller in San Francisco and New York City.
• Married couples with children make up under one in four households today
• Between 2010 and 2011, 86.5 percent of small metro areas saw an increase in the number of people living in the city.
• Cities in the smallest metro areas (150,000-250,000 people) saw the largest increase in people within their boundaries.
• Cities in small metro areas grew in population by 0.89 percent outpacing suburb growth by 0.67 percent.
• Small metro cities are seeing more growth then big cities. 55 percent of cities in small metro areas grew at a faster rate than their suburban counterparts between 2010 and 2011. 51 percent of cities in large metro areas added population at a greater rate than their suburbs.
• The nation added more than 2 million households in the 12 months that ended March 31 about triple the average for the previous four years. Most of the gains came from baby boomers. – divorce?
• The number of people ages 25-29 who moved across state lines reached its highest level in 13 years

Multifamily housing

• Multifamily construction is two-thirds of the way back to prerecession peak.
• New apartment complexes are going up at fastest rate since July 2008
• In Houston, from January to September, construction permits for multifamily housing increased by more than 70 percent over the year earlier.

Single family housing

• Single fam construction is one-third back to peak
• Houston permits for single family increased 25 percent from Jan to Sept.

Economy and General Housing

• Net worth increase by $1.7 trillion in Q3
• Households got $301 billion bump in value of real estate assets
• Case-Schiller 20 home index has risen month over month for 6 months with four consecutive monthly year over year gains.
• Jobless rate of those ages 25-34 dropped from 9 percent at start of the year to 7.9 in November

• There have been 559,000 home seizures in 2012. The Fed Reserve Bank of NY had estimated as many as 1.8 million properties would be taken back this year.   Foreclosures are at a five year low.
• Foreclosures and short sales made up 24 percent of October sales. The same level as September but down 28 percent from a year earlier.
• There were 2.14 million existing homes for sale in October, down 1.4 percent from September. That translates to a 5.4 month supply at the current sales rate, the lowest level since February 2006.
• The number of residential properties for sale in the U.S. shrank to the lowest level in a decade. Prices have appreciated in the fastest pace since 2005.
• Median price of an existing home sold in October jumped 11 percent from a year earlier, steepest annual increase since November 2005.
• Almost a quarter of all US homeowners with a mortgage are underwater
• Fed reserve is buying $40 billion in mortgages every month which is keeping rates low.

General home building

• Pace of home building rose to its highest level in more than four years in October. U.S. builders increased their spending on construction projects in October by the largest amount in 5 months. Level of spending is still considered low.
• Builder confidence in the housing market rose for the 8th straight month in December to its highest point in more than six years. Sentiment reading of 47, means more builders have a negative outlook than a positive one

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Yabbly  is a new community-based question and answer Website and app  which allows consumers to receive feedback on potential purchases from others who have recently been in the same situation.   A consumer can ask a question from the general community and Yabbly will then match the questioner with others who have recently made similar decisions.

This Website has the potential to be another tool in the quickly expanding consumer-shopping toolbox and as a result, brands will have to work even harder to get their message across.

http://www.fastcompany.com/3002609/buy-or-not-buy-yabbly-ask-someone-whos-been-there-bought

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With one quarter of 25-to-34 year olds living with their parents, multi-generation homes are becoming more practical for many families.  In the U.S. as a whole, the number of 25- to 34-year olds owning homes dropped 12 percent from 2005 to 2010. Fifteen percent in that age group can’t find work.

Some home builders are responding to the new marketplace.  Last year, Lennar Corp introduced a “Next Gen” model, calling it a “home within a home” – houses that feature a completely separate unit with its own kitchen, bathroom, bedroom and living area, and its own entrance, attached to the main house via a double door similar to adjoining hotel rooms. Said Lennar’s western U.S. president, “We can’t build them fast enough,” while noting that most buyers were primarily families with either grown children or elderly parents living in the attached unit.

While some houses are getting larger to better accommodate more family members, there is also a demand for smaller homes, and in some cases, much smaller.  In 2008, for the first time in at least 10 years, the average square footage of single-family homes under construction significantly shrank, from 2,629 square feet in the second quarter to 2,343 square feet in the fourth.

Those are mansions, however, compared to the new properties popping up in cities like San Francisco, Boston, and New York City. The new “micro” apartments being built in these cities range between 225 and 350 square feet.  A 24-unit, four-story building in San Francisco’s South of Market (SoMa) neighborhood, will be comprised of 300-square foot apartments, which come fully furnished with compact features such as a dining-room table that folds out into a bed.

As we have recently written in the context of what we call the consumer’s new Values Hierarchy, individuals and families are looking for homes closer to work, shopping, entertainment and other forms of civil and social engagement.  They will also be looking for the kind of connectivity that multi-generational homes can provide.   The demand is there, can home builders fill it?

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Some might assume that the rising expression of desire for transit-oriented communities is coming only from liberal bastions and hipster havens like San Francisco,Boston andPortland, but here we see those desires being expressed by majorities in a metropolitan region as politically and economically diverse as metroHouston. Perhaps,Houston is turning into a land of peace-flag-waving, soy-latte sippers? We doubt it.

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With members of the class of 2012 graduating this week across the U.S., it’s interesting to note the challenging economic times they and their immediate predecessors face. While many have noted that the unemployment rate for *all* college graduates is about half that of the general unemployment rate, it is those in the youngest cohort of college graduates who face disproportionate economic difficulties. Even when accounting for education, the effects of the recent Great Recession have been uneven on different age groups.

According to an estimate by Fidelity Investments, a married couple retiring this year should expect their healthcare expenses throughout retirement to total $240,000. Currently, 42 percent of Boomers have less than $25,000 saved for retirement. (Boston Globe, 5/9/12; Esquire, 4/12)

With respect to that group of recent college graduates mentioned above, those young adults shouldn’t expect a wave of career advancement openings to emerge from the mass-retirement of Baby Boomers any time soon. Too many Boomers remain financially unprepared for retirement, especially considering that housing prices haven’t climbed for a decade. Boomers are likely to stay in their jobs longer than expected and remain the driving force of the U.S. economy.

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