Many of the pundits in our industry are suggesting that there has recently been a radical change in the nature of our business. I was a child of the 60’s and I understand the concept of “radical” change. I marched for peace and for civil rights. I was at Grant Park during the 1968 Democratic Convention. I remember Woodstock, can still recite the lyrics of most of Bob Dylan’s early protest songs and while there can be no doubt that “the times they are a changin’” for the housing industry, it is not by any means a radical change. There is no “battle outside ragin’ to shake your windows and rattle your walls.” Instead, these changes are simply the evolutionary cyclical turn of the wheel.
Do you remember housing cycles or, if you have not been in this business long enough to experience one, have you at least heard of them? The Baby Boomers, which have been the major drivers of housing demand in this country for the past 40 years, have pretty well run their course in regard to conventional housing. We have built more than sufficient move-up product recently and the additional homeownership opportunities for this market segment are probably limited for the most part to active-adult (55+) communities
While the demographics suggest that the Echo-Boomers (or “Millennials” or “Generation Y”, if you prefer), will, in time, more than replace their parents’ generation and become the next major driver of housing demand, the present economic conditions and the ever tightening grip on credit will make it difficult for these potential home buyers to match the homeownership rates of their predecessors by the time they reach their 30s and 40s unless we act intelligently to assist them. Married couples without children (including empty-nesters) will be the fastest-growing household type, followed closely by single person households.
I would propose that the solution is to “go back to the future”, to the housing products with which we were successful in the late 60s and early 70s for the Baby Boomers, maintain that cost effectiveness but update them for the 21st century with the design and features that the new markets have come to expect, and ride that wave to success and profit. These were initially smaller, affordable homes but with integral expansion capabilities and with some forethought we can design and build them better today to reflect the new markets and their needs and wants.
And to fully and properly service the new target markets and help them in achieving their goal of home ownership we will have to provide the same services and assistance that we did thirty or forty years ago but updated with the current technology and tools that we now have available.
Additionally, as household growth among Hispanics and Asians is anticipated to continue to accelerate, adjustments in community and housing design are required including product for the multi-generational households which are more common within these ethnic groups.
As George Santayana wrote in his The Life of Reason, Volume 1, 1905, “Progress, far from consisting in change, depends on retentiveness. When change is absolute there remains no being to improve and no direction is set for possible improvement: and when experience is not retained, as among savages, infancy is perpetual. Those who cannot remember the past are condemned to repeat it.”
So let’s not repeat the mistakes of the past, especially the recent past, instead remembering the past while also learning from it. Study the underlying reasons why we sold houses to the Baby Boomers, then implement the obvious changes for today’s markets and enjoy the well deserved success and profit from going “back to the future.”
Please visit our company’s website to learn more about our services and feel free to contact me for further details on what I believe are the necessary steps to maximize our success with these new target markets – http://levitanassociates.net/default.aspx.