The American dream is to grow up, work hard, and one day have enough money to buy the perfect home in the perfect neighborhood, right? Not exactly. According to Emerging Trends in Real Estate® 2016, released in conjunction by the Urban Land Institute and PCW, we may be experiencing a serious shift in the concept of home ownership. Here’s what you should know about the increasing need for affordable housing options.
Fewer people own homes today than 10 years ago
Before the Great Recession, which started in 2007 and ended two years later, home ownership was roughly 70%. That number has dropped to 63.5%, according to the report. That is in part because people lost their homes to foreclosure and are only now getting to the point where they are ready to buy again. Other people—specifically Millennials, the largest generation—have delayed buying a home. And older folks who have owned a home for years, or even decades, have decided to downsize, selling their homes and opting to rent instead.
As a result, there is a much higher demand for rental housing both in and outside the city, and there is a growing—some think dire—need for affordable rental housing.
Cramped city living leads to new ideas for affordable housing
People of all ages are moving into already-dense cities, and it is a challenge to find affordable housing. As a result, developers are building micro-dwellings to accommodate both the number of people and their budgets.
Microhousing, defined as studio-type apartments no bigger than 350 square feet, are cropping up in big cities. The trend is certain to continue as young, single professionals snatch up the units, forgoing space for much cheaper rents—which can be as much as 20% to 30% lower than traditional apartments. Additionally, many units don’t need to be furnished because everything is built in. Plus, they offer common areas where tenants can socialize and entertain, so they are very appealing to recent graduates and young Millennials.
Other cohousing options are also popping up where, for example, tenants pay rent for a bedroom and bathroom, and share common areas, such as the kitchen, with other paying tenants.
The tiny house trend sweeps America
Small living quarters aren’t just for city types. People across the nation are choosing to build or buy miniature versions—as small as 100 square feet—of the bigger, more conventional homes so common in the U.S. There’s even a show about it on HGTV.
The desire to save money, reduce their carbon footprint, live a simpler life, or gain time and money to spend on travel and fun, outweigh elbow room for these people. Tiny house buyers will often rent land, rather than buy it, so that they can pick up and move whenever they feel like it. So it certainly offers a level of freedom that traditional homeowners don’t experience.
What does all this mean for you and your real estate business? In the coming years, more and more real estate customers may be seeking affordable housing options. You could increasingly be working with clients who are buying, selling, and renting these types of properties. It’s important to stay ahead of the latest real estate trends so that you know how to best serve your clients.
Want to learn more about meeting the needs of low to moderate income home buyers? Check out our course on Affordable Housing Opportunities for Low-Moderate Income Buyers.