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Tonight I was reading some notes from John Burns (John Burns Real Estate Consulting) and contemplating how his thoughts apply to our market here in the Poulsbo area. We currently have several hundred new housing starts either under construction or planned for construction in the very near future. I have been wondering about the builders and developers who are going to be investing in and marketing these homes, and I have been wondering who will be occupying them. Here are some of John Burns’ thoughts on what builders should be focusing on nationwide. I am excited to see how it all plays out in my neighborhood. Number 3 is a definite need in our area! Do you agree?
1. Less move-up housing
“Many of those born in the 1970s bought their first home 10+/- years ago and thus are far less likely to have sufficient equity to move,” Burns said. “They are also more likely to have gone through foreclosure, which has a marginally positive housing demand element to it, as some will return to homeownership soon. Not only are there fewer traditional move-up households, but a high percentage of them are unable to move.”
2. More luxury housing
“Luxury home buying typically occurs when buyers reach their years of peak earning and net worth,” Burns said. “The U.S. currently has more people in this group, aged 46-60, than ever before, and they have more income (two careers) and less expenses (fewer kids) than any generation before them. Compared to prior generations, this group is loaded.”
3. More retiree housing
“Eight million more people will turn 65 over the next 10 years than the last 10 years, and more of them than ever before plan to move, according to our Consumer Insights survey,” Burns said. “This creates opportunities in all regions and at all price points, as the demand drivers are no longer solely golf courses in sunny states. Proximity to kids and grandkids, as well as entertainment, and health and wellness are just a few of the main success drivers we see over and over.”
4. More entry-level housing, but not yet
“While entry-level buyers are financially challenged, the number of people is so large and the desire to own so high that many entry-level buyers will emerge over the next decade, especially if mortgage rates and down payment requirements stay low,” Burns said. “While most will buy resale homes for affordability reasons, a small percentage of a large number will still translate to strong new home demand.”
