Two independent forces have coalesced to bring about new demand in real estate product. The great recession of 2008 and the impending exponential growth of the Aging-In-Place baby boom demographic. The recession of 2008 burst the housing bubble and undercut the underpinnings of that market dynamic. An overbuilt, overvalued market driven by speculation will, by definition, collapse. Fueling that overbuilt, overvalued market were the “McMansions” with their two story foyers and soaring square footages. That era of conspicuous consumption has drawn to a close. “Value and need are driving the home purchase decisions, not the potential investment value,” says Stephen Melman, an economist for the National Association of Home builders.
The second major force is the need for utility designed into architectural programming. More specifically, incorporating universal design principles into new home construction. Architecture is supposed to work for you. By this, I mean a young family may need a really well thought out mud room or “drop zones” as they’re dealing with children and family pets in good weather and bad. Or it may mean a roll-in shower or a zero-step entry as the Aging-In-Place baby boom demographic addresses their loss of agility/mobility. Universal design is often misconstrued to mean institutional or sterile design. Nothing could be farther from the truth.
When the housing bubble burst the buying public and lending institutions began scrutinizing real estate products for their true value, not their speculative value. By real value I mean how well does the design aesthetic, as well as its functionality, serve the daily pragmatic needs of the owner? And likewise the lender needs reassurance the loan to value ratios are in sync. The days of grandiosity and “liar’s loans” have thankfully come and gone.
The relationships between producers and consumers have changed throughout our economy. There was a time manufacturers’ research and development (R&D) departments brought new products into being. Then their marketing departments went to work creating demand and selling the new improved products. In other words, manufactures dictated what the consumer would purchase. Today the aggregate consumer dictates what producers manufacture. This is true in real estate offerings as well, it’s just the lead time and market response with architecture is slower than with other consumer manufactured products.
I recommend you read with interest this article by S. Mitra Kalita in The Wall Street Journal, Life & Culture section of the November 2, 2011 issue. The article is titled, “Blueprint for a New American Home” wherein she profiles how, “The new American home is taking shape.”