Looking at the trends of last year will be key as builders plan for the new year
By ZACK JOHNSTON
When we imagine the future, we fantasize about all the technological and societal advancements that will lead to all new ways of living and prospering. As we visualize our ideal tomorrow, we can start imagining the changes necessary to reach those results. But to really see how in which the world will change we don’t necessarily need to imagine the future, we just need to look at the past.
Housing is a complex piece of the private and public sectors with many factors at play, some in concert and some in competition. In this industry, the most successful are those well versed in its history, up-to-date on current trends, and also innovating for the future.
This past year yielded certain housing trends that were more predictable, and others that may have surprised those in the know. These trends will surely come into play in 2020, and will have an effect on every aspect of the indus- try including design, production, and financing.
For many builders and developers, there is green on the horizon as younger generations are entering the housing market and shifting their housing needs with age. It represents enormous potential opportunity to capitalize on emerging markets with consumers hungry for change and innovation. The industry is clearly ready to jump on this opportunity, and those that are ahead have already taken steps to prepare.
The most obvious change is the embrace of sustainability and energy-efficiency in our homebuilding. These have long been features that are attractive to younger homebuyers, but now they’ve entered the mainstream and in a lot of cases they are now simply standard.
With the consequences of human activity on our planet growing clearer over the past year, it underscores the push for creating a built environment that doesn’t pose such a massive energy burden.
More and more buyers are expecting to see these features included in new homes, and in states like California, building codes will start to mandate that virtually all new buildings will get their energy from renewable sources. As the trend persists, we’ll continue to see energy systems in homes new and old transform throughout the coming years.
Appealing to first-time buyers will continue to be the name of the game moving forward, but 2019 offered some telltale sign that it will not be as simple as utilizing popular energy-efficient features. The growing concern that should be on every builder’s mind is the affordability of housing. About one third of owners who made their first home purchase last year could not have done so without the help of family or friends on the down payment, according to The 2019 Profile of Home Buyers and Sellers report from the National Association of Realtors.
This is just one trend found in NAR’s report that is relatively unique to the past year, as Jessica Lautz, NAR Vice President of Research, detailed in a press conference call.
“There’s a number of ways how buyers enter the market, and we’re seeing that first-time homebuyers are actually entering pretty creatively to be able to have homeownership as the American dream,” Lautz said.
2019 was a year that represented changes to our customary living situations that have otherwise been ingrained. The lack of affordable options has left younger buyers with fewer avenues to pursue ownership.
“What we found is that marriage rates overall in the US have dropped, but that there’s a rise in unmarried couples and also a rise in roommates who are purchasing homes together which is actually a very unique trend that we’re seeing in the data. Four percent of buyers in the last year did purchase homes with roommates; that’s been as low as zero percent in past years,” Lautz explained.
The percentage of first-time homebuyers is lower than the historical average of about 40 percent, according to the report.
“We’re also seeing that the age of the first- time homebuyer actually rose to the highest number that we’ve recorded before, it’s now at 33 – that’s a rise from 32 last year,” Lautz said.
This is further indication that prospective buyers are having to save for longer periods of time to afford down payments, and that factors like outstanding student debt are making it difficult for potential buyers to make that next step, according to Lautz.
An influx of new buyers is always great, but not if what they’re looking for isn’t being offered. It will not be enough to simply offer more starter home options, we need a fundamental change in the ways we view construction and the function of homes.
If this year taught us anything, it’s that the houses of tomorrow will be vastly different from our conventional homes today, and this will play an important role in keeping prices affordable.
It is true that the addition of energy-efficient technology can add to a home’s monthly mortgage payment, but that amount is offset by the monthly savings from reduced energy consumption. Moreover, many buyers see energy efficiency as value-adding, and are willing to pay slightly more for it.
So as 2019 comes to a close and we ring in 2020, let’s not lose sight of what the past trends have taught us and to use those lessons to build on future success.
Zack Johnston is an Assistant Editor for Builder and Developer Magazine. He can be reached at firstname.lastname@example.org.