Recession brings changes in housing desires
| April 18, 2010 9:00 PM
The housing landscape is ever changing. Times like these where recession looms have a tendency to change perspectives. These perspectives affect the housing market, just as high interest rates, expiring tax credits and an influx in foreclosures changes the perspective of what a good price is for a home.
The recession has changed the way people spend their disposable income too. Normal patterns show people vacationing closer to home and investing to upgrade existing homes instead of buying vacation homes. Our higher end real estate has been affected as have luxury homes throughout the country.
Recent reports from traveling colleagues indicate some of the hot vacation spots are beginning to move housing inventory again. In places like Florida, the prices of these homes are far less than before the recession. We have reported on the condominium market here before and although we are seeing movement in that market, like Florida, these sales have been at far less than during the heyday.
A recent report from the Urban Land Institute explains some of the attitude changes that affect the real estate market:
The report cites four major U.S. demographic waves to watch in the new decade:
1. Aging baby boomers (55 to 64 years old) - Although they're nearing retirement age, many will keep working out of necessity or by choice. Some will be forced to stay in their suburban homes until values recover. Those who are able to move will not choose traditional retirement locations or senior housing, opting instead for more mixed-age living environments that cater to their active lifestyles. Suburban town centers with a walkable urban feel will appeal to this group.
2. Younger baby boomers (46 to 54 years old) - Now in or entering their prime earning years, this group will also face a tough time selling suburban homes, hampering the ability of these boomers to move. Because the recession has left many younger boomers with flat incomes and less home equity, their ability to purchase second homes will be greatly diminished, curbing prospects in general for the second home market. However, like their older counterparts, they will be drawn to more connected, compactly designed communities when they're able to switch houses.
3. Generation Y - This tech-savvy generation has a population of about 86 million, more than the baby boomers. Gen Yers place high value on community - on places (either virtual or actual) to gather and share information, ideas and opinions. As they enter the housing market, they will be far less interested in home ownership than their parents were when they were young adults. The recession, said McIlwain, has "tempered the interest of Gen Yers in buying their own homes and they will be renters by necessity or choice for years ahead." Despite having small incomes, Gen Y will gravitate toward walkable, close-in communities, choosing isolated housing on outer edges only as a last resort because it is the most affordable. Green, "net zero" homes powered exclusively by alternative energy will have strong appeal to this group.
4. Immigrants - Already 40 million strong, the total population of legal and illegal immigrants in the U.S. has an even greater impact when the children and grandchildren are included as a factor. The tendency of immigrants to cluster, and to live in multi-generational households, suggests that they would prefer larger homes if they could afford them and if the homes were in neighborhoods with a strong sense of community.
No matter what changes you have made in your perspective and the type of home you will enjoy, there is still time to facilitate that change while interest rates remain low and tax credits are still in effect.
Kim Cooper is the spokesman for the Coeur d'Alene Association of Realtors, www.cdarealtors.com. Kim and the association invite your feedback and input for this column. You may contact them by writing to the Coeur d'Alene Association of Realtors, 409 W. Neider, Coeur d'Alene, ID 83815 or by calling 667-0664 with your questions or commentary.