The Lost Decade and the Future of Housing

The past decade could be said to have been the decade that never existed in many respects, and one that contained many events that we wish never happened including terrorism, tsunamis, hurricanes, and wars. The DOW closed on December 31, 1999 at 11,497.12 and in the following decade reached a peak of 14,164 on October 9, 2007 then proceeded to erase all of the gains of the previous seven years closing out the decade at 10,428.05. Homeownership rates in 1999 were at 66.8%; reached a height of 69% in 2004 and then down to 67.1% for the 1st quarter of 2010. With the record number of foreclosures happening and anticipated in the coming year this number will most likely continue to decrease. Housing starts in 1999 were 1,640,900. They reached a peak in 2005 with 2,068,300 starts, and have since dropped to 553,900 for 2009. The National Association of Home Builders forecasts only 991,000 starts for 2011, which is significantly below the historical national average.

During the past decade many strides were made in the way we develop housing and much attention was given to the demand for in-fill housing and the desire for pedestrian oriented built environments, but unfortunately, successful infill development was a small percentage of the number of homes built over the decade. The majority of housing continued in the tradition of urban sprawl that has been prevalent in America since World War II. The model of suburban neighborhood development that has been followed over the past 65 years filled a need and served its purpose for a time, but now is the time to change our patterns. Not only do demographic forecasts a major profile change of the American population, but the living and working environmental desires of the population are changing as well. Additionally, as good stewards of the world in which we live, we need to radically change how we inhabit the world and utilize its limited resources.

With the current lull in the housing industry, we are afforded an opportunity to look at what we build, how we build and for whom we build and radically alter how we do business in order to be better stewards of our environment and meet the changing demands of our customers. The baby boomers with kids that fueled the past several decades of housing in America will no longer be the dominate buyer profile in the marketplace. The future buyers have significantly different preferences than those of the past. Infill development will play a significant role in the “new” housing market. Richard Florida, in his March 2009 article in The Atlantic, does and excellent job of defining the changes ahead.