Beyond the Recession: Beyond the Recession: DynamicsDynamics

Impacting Residential Impacting ResidentialReal Estate Real Estate

in in Central OhioCentral Ohio

Robert VogtFebruary 2, 2011

www.VSInsights.com

Current trends impacting residential real estate

Future trends that will influence buying/rental patterns

Residential products that will be in demand

(He didn’t see his shadow)

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Ongoing soft economy continue to hit the real estate market hard; job formations are non-existent (only 3,000 jobs BCP)

Less educated households have unemployment rates double that of college grads

Men have a higher unemployment rate than women

Households have doubled up/moved back home to save $$

Understanding the Housing Understanding the Housing ConsumersConsumers

Seniors (65+)Older Baby Boomers (55-65)Younger Baby Boomers (46-54)Generation X (30-45)Generation Y (12-29)

Tenure ReversalTenure Reversal Those households who can afford higher rents are

migrating to better quality product Right now they’re not migrating to for-sale

housing Generation Y is supporting (wanting) new rentals

in upscale locations Empty nesters are considering for-rent housing

choices in increasing numbers Homeownership for the youngest households,

under age 25, increased in the 4th quarter of ’10 from 22.3% to 22.9%

Demographics Influence on Future TrendsDemographics Influence on Future Trends

Boomers continue their dominance on housing trends

Gen X is looking to reboundGen Y is looking for newest most

amenity rich choices (and instant gratification)

Immigrants will save some of the older, obsolete product (but not all)

The Boomers The Boomers Responsible for all the multifamily product

in 1960s and 1970s

Suburbanization of BoomersSuburbanization of Boomers

They took their kids and moved to the ‘burbs in the 1980s, ‘90s and ‘00s

The Boomer ExpansionThe Boomer ExpansionIn the Columbus MSA, the age 55+ renter

households will increase 19.2% between 2010 and 2015 (nearly 10,000 households)

55+ owners will increase 18.7% (34,000 households)

Younger households (<55) will actually decline by 1.0%

What Boomers Want….What Boomers Want….Most want to stay where they areNext 10 years will drive demand for move-

down housing (rental, condos, small lot development)

Real demand is probably still 10 years awayGreat Recession may have pushed back

new housing decisions 3 to 5 years

Boomer Preferences…..Boomer Preferences…..Active lifestyles and social interactionLifelong learning and cultural activitiesProximity to shopping, eventsVillage type neighborhoodsHomes that cater to the new life stage

(smaller, less maintenance)Safe environment

Boomers in the FutureBoomers in the Future They will influence housing design

in the coming decades

Who Will Buy the McMansions?Who Will Buy the McMansions?

It’s got to be Gen X

But………….But………….Homeownership rates for householders

35 to 39 declined to 60.5% in the 4th qtr.

Down more than 6 percentage points in 5 years!

Foreclosure? Job loss? Still not completely explained

Generation Y Generation Y Three times the size of Gen X (60-80 million) Seeking modern, green, tech savvy choices Want increasing choices in urban neighborhoods Only issue is falling incomes and student loans

(guess why they are also moving home?)

Gen Y Want Walkable, Gen Y Want Walkable, Mixed-UseMixed-UseBut what can they afford?1/3 will pay more to walk to shop work and entertainment2/3 say that living in a walkable community

is importantHalf of Gen Y would trade lot size for

proximity to shopping or to workEven families with children, 1/3+ would

trade lot size and ideal homes for walkable, diverse communities

Influence of ImmigrantsInfluence of ImmigrantsNew immigrants represent a source to rent

or buy our large supply of older, obsolete product (but probably not forever)

Immigrants are initially always rentersCurrently represent about 6.9% of total

Columbus MSA population (63.7% increase over 2000 Census)

Holding Us DownHolding Us DownVacant properties will continue to increase

(expected to add 2,200 more vacant units in the next five years)

Functionally obsolete product will continue to adversely impact neighborhoods

Trends to Watch/EmbraceTrends to Watch/Embrace New homes will become smaller, higher quality

with expanding technology Walkable communities will be the rage (Gahanna,

Westerville, Grove City, Jerome Village) Increasing renters by choice One-person households (majority will be female)

will increase 5.4% over next five years (think about security and convenience)

Satellite towns around Columbus will attract seniors

Good Luck in 2011