The Minnesota Association of REALTORS just published, in our monthly real estate publication, a few thoughts regarding the "new normal" for both life as Minnesotans, and life in the world of real estate. Here is a summary of the real estate portion of this article in italics, with our personal findings in non-italics.
1. Smaller, less-maintenance housing units.
As households continue to shrink (less kids, more singles) the consumer will have less time or desire to maintain a large housing structure. Instead they will seek smaller, maintenance-free housing units. Think about the substantial growth in the Minneapolis Condo market. Smaller units, no maintenance, nice amenities, privacy. Some folks challenge the privacy statement....
This is interesting, especially considering the larger-than-usual inventory of ramblers on the market in West Savage right now. Once thought to soon be the new hot-button for our retiring Baby Boomers, the new demand seems to be simplify simplify simplify. More and more Boomers are seeking townhomes or maintenance-free housing units. At a low cost. With no yard work.
2. Townhomes/patiohomes and perhaps variations will also become popular.
Some will be established for people who want the best elements found in a single family home - without most of the work.
3. More single-family home remodeling to accommodate adult children unable to secure employment opportunities in the "New Normal".
Career jobs available to young people with high school diplomas or less are slowly being eliminated in America. Instead, there is a more fundamental shift in the work force. With more and more people pursuing community college and older workers re-entering the workforce, employers seeking laborers have a large pool of trained/experienced candidates to choose from. This places the potential worker with less education/no experience at a significant disadvantage. ... this makes living on their own a real challenge.
We briefly hinted to this emerging trend on West Savage Blog earlier this year. We are just beginning to see the trend of homes being completed with separate living quarters for grown children residing with parents and/or aging parents.
That does not mean there will not be some new construction, just nothing like we became accustomed to during the late 1990's and early part of this decade. Remodeling will pick up some of the slack for the building trades, but the cost of remodeling and the added regulatory barriers that are triggered when pulling a building permit will cause many to attempt a "fixer upper" project.
We are in a unique position in West Savage, in that our local marketplace borders an area in Shakopee rife with foreclosed and short-saled vacant lots, just to the West off County 16/Eagle Creek. For almost half of West Savage located in school district 720, buyers are having the choice of buying a home in Shakopee schools where they can build a newer home closer to schools for less money than buying an existing home. This has been a huge driving factor for much West Savage inventory. The good news is these lots are fast-disappearing and so we expect this trend to phase out in the fairly-near future.
5. Leasing will increase as consumers want less personal responsibility - not more.
Think about the lack of maintenance in homes...today. Think about this phrase - buy it, use it, wear it out, throw it out. Does that describe today's consumer? Why wouldn't consumers - especially with the significant increase in single-person households - begin to look at housing as an expendable item? Is that not what they do with cars? Lease a nice auto, drive it for 2-4 years, then get rid of it for something new and more exciting.
This is definitely a trend we are seeing. We are still seeing homeowners walking away from homes. Of course, many of these have fallen on hardships. But, we are also seeing many of them tell us straight-out that they just don't want the house anymore, even though they can make the payments. They just want something different. On a couple of occasions, we have offers come in on listings from buyers who are letting their current homes slip into foreclosure, and want to buy a new house before the late payments begin showing up on their credit reports. No doubt about it...there are people out there working the system. We are seeing homes badly abused, with doors and countertops, appliances and furnaces ripped out, trim and carpet removed, and holes in the walls. People are packing up and buying - or building. Consumers ARE treating housing as expendable. Pride in the home, while still very much alive in many communities, is not what it used to be.
6. Time shares could be a tremendous alternative for time-starved consumers
unwilling to spend their weekends doing yard work and building maintenance on a second home. It is hardly a vacation when you spend a significant amount of your free time mowing and maintaining your "vacation home".
Lake homes in the northern part of the state are taking a large hit, as consumers are not wanting to spend the time, money and effort to drive to a home to do the labor on the house, lot, dock and boat. This is a trend we will be watching more closely in the future. For those into that sort of thing, now is a good time to start looking for a lake home.