It can be difficult for real estate developers and property managers to pin down what kind of housing people need in the 21st century. In the second half of the 20th century, there seemed to be a predictable progression for how people lived and what they needed: they moved from city to suburb, from single to couple to raising a family, from renting to homeownership, from small house to large, from having little stuff to having a lot . These patterns were logical and easy to design and build around. These patterns are quite at odds with 21st century realities. Consider these 21st century realities:

  • 2.54: The smallest household size since the US Census began —a figure that has continuously shrunk over the last 100+ years, both in the US and across the globe.
  • 19.6: The percent of households with married with children —less that half of what it was in 1970.  
  • 62.9 percent: The lowest homeownership rates in over 20 years.
  • 6.7 percent: The lowest rental vacancy rate in over 20 years.
  • 1.1 and 15.2: Percents of American housing stock that are studios and one bedrooms respectively, despite 27 percent of the population living alone.
  • 3 out of 4: Number of millennials who prefer living within 20 minutes of city center.
  • 11.4: The number of times an American will move in their lifetime. As the average American lifespan is 78.4 years in the US, that’s one move every 6.87 years.  
  • 10,000: The number of baby boomers retiring each day in the United States.
  • 65 percent: the number of North Americans that have smartphones (more on that in a minute).

Viewed out of context, this data could be dismissed as anomalous. But many of these trends, particularly the shrinking household, have been going on for decades. This isn’t a deviation from normal. This is normal.

For most of the 21st century, developers have followed convention, not data, and continued to build more large, exurban and suburban housing. In the 2000s, 23.3 percent of all new homes were built in undeveloped areas (exurbs), 33.2 percent were in areas with a prior density below one home per acre and 31.9 percent were in areas with a prior density between just one and four homes per acre (underdeveloped suburbs).

The reason developers went this route was economic. In un-or-underdeveloped areas, land is cheap and regulations are light. This allowed developers to offer homes at bargain basement prices. Building this way was so cheap developers made homes artificially large (the median size for completed single family homes was 2400 square feet in 2015), thereby justifying higher prices.

 But continuing to develop this way is a gamble as it makes a lot of questionable assumptions about the future. It assumes the continuance of readily available financing , of movements towards family and permanency , of the availability of cheap gas, of people willing to keep adding another 15 minutes to their commutes, of exurban and suburban municipal economic resiliency and so on. This gamble might make you a quick buck here or there, but when one or all of these assumptions proves incorrect, you might also lose your shirt.

 Designing for, and building around, how people live in the 21st century means letting go of assumptions and paying attention to facts. And the facts are these: household sizes are shrinking, more people are renting than ever, people aren’t staying in one place very long and people are sick of commuting.

As a developer and property manager, here are some things you can do to design around the facts:

  1. Build more single/small household friendly housing. There’s a great need for housing that matches demographic realities. This applies for empty nesters as much as it does for the fresh-out-of-school millennial. There is some indication that this is starting to happen. A recent report by RCLCO showed that apartment sizes are down 7 percent since 2009.
  2. Build more centrally. Urban cores and their immediate neighboring areas have two benefits that are unlikely to lose their appeal anytime soon: convenience and increased economic opportunity. And though there is a lot of talk about urban migration being overhyped, many analysts miss a critical point: many people, millennials in particular, aren’t moving to the far-out suburbs because they don’t want to live in urban areas (they do), it’s because they cannot afford to.
  3. Design for renters. A combination of factors (acute with millennials) such student loan debt burden, stricter lending and stagnant real income growth virtually ensure that renting will be a fixture in the housing market for the foreseeable future. Even if fortunes change for the current market, new markets like Generation Z will take over the rental mantle —and this cohort will be more mobile and less tethered to car-intensive suburban settlement than generations that preceded it.     
  4. Design around technology. So many of our needs —both practical and recreational —are now satisfied by technology. In many ways, our homes are comfortable places to hang out while using our devices. The 21st century is a more casual, connected, materially minimal place to live. We should design accordingly.

All of these considerations point to smaller, more flexible, turnkey housing. The smaller size is a better demographic match for many people and it allows developers to get into costlier urban markets while still maintaining accessible price points. Flexible housing works for rental units whose renter profile —and needs —are a moving target. And turnkey housing (i.e. fully or partially furnished) appeals to renters who may not be staying in a place very long and therefore will pay a premium for the convenience of having everything ready to go.

These are some of the considerations URBANEER factors in when working with developers and property managers. Our space optimizing furniture systems are designed to produce more compact, flexible and appealing housing. Our systems allow developers to build compact units with the functionality and appeal of larger ones. They allow building managers to fit out existing spaces that deliver more value to the renter while commanding a rental premium that increases profitability. In several cases, we’ve managed to create additional dwelling units on existing floor-plates.

If you are a developer or property manager looking to design and build new spaces or retrofit old ones based on facts, not assumptions, about the needs of 21st century citizens, URBANEER would love to talk to you.

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