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The Economy & Housing: How Does One Affect the Other

Explore how demographic changes impact housing trends in Ohio, Indiana, Pennsylvania, Kentucky, and West Virginia. Analyze the evolving preferences of Millennials and Baby Boomers, the demand for affordable housing, and the influence of economic factors like fracking on rental markets.

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The Economy & Housing: How Does One Affect the Other

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  1. The Economy & Housing:How Does One Affect the Other Andrew Mazak Vogt Strategic InsightsMay 2016

  2. Demographic Changes Impacting Housing(Ohio, Indiana, Pennsylvania, Kentucky & West Virginia) Source: 2010 Census; ESRI; Urban Decision Group; VSI Source: 2010 Census; ESRI; Urban Decision Group; VSI

  3. Demographic Changes Impacting Housing(Ohio, Indiana, Pennsylvania, Kentucky & West Virginia) Source: 2010 Census; ESRI; Urban Decision Group; VSI Non-rural counties renter households 25-34 years of age = +2.9% increase projected

  4. Demographic Changes Impacting Housing Seniors: Aging In-Place Young Households: Moving to Big City

  5. Demographic Changes Impacting Housing(Ohio, Indian, Pennsylvania, Kentucky & West Virginia) Source: 2010 Census; ESRI; Urban Decision Group; VSI

  6. Demographic Changes Impacting Housing Rural Rental Housing Non-Rural Rental Housing

  7. Gen Y (Millennials) Is Now The Largest Generation • Exposed to the economic reality of the recession • Declining property values, poor job prospects • Moved into basements, lived with parents and ‘hung out’ on social media

  8. What is it about Millennials? • It’s numbers • They’re staying single longer • They’re not buying homes • They’re focused on experiences • They want to be in the middle of activity

  9. Baby Boomers is #2 • Now the second largest generation • Rapidly becoming empty-nesters • In search of experiences (sound familiar?) • Worn out from the big house • Connected like their kids (with access to information) • Love the idea of being flexible

  10. Can Similar Housing Appeal to Millenials and Baby Boomers?

  11. How Do Changing Demographic Trends Translate to Housing Demand? • Millennials and Baby Boomers are seeking similar amenities/features/characteristics • Increasing demand for 1-bedroom units • Locations close to entertainment, dining, sports and the arts. • Want walkable. Want to ditch the car. • And maybe close to where they work. • Will reignite the demand for condominiums.

  12. Rural Area Rental Housing Conceptual Challenges: Appeal to Millennials and Baby Boomers • Accessible design (single-story or elevator-served) • Want walkable community – dog/pet friendly • Have community amenities to promote interaction with neighbors, such as: clubhouse, fitness center, business/computer center, scheduled activities/ outings, community gardens and/or rooftop patio

  13. Demographic Changes Impacting Housing(Ohio, Indian, Pennsylvania, Kentucky & West Virginia) Source: 2010 Census; ESRI; Urban Decision Group; VSI

  14. Ohio Overall Rental Market Conditions Rental Assistance units are nearly 100% occupied, while non-RA units in RD-515 projects in rural areas typically experience lower occupancy levels.

  15. Affordable Housing Becomes More Critical • Economy is changing and so is the demand for housing. • Higher paying jobs are being replaced by lower paying ones. • Product built in the ’60s and ’70s to house the baby boomers is obsolete in today’s market. • Not terribly energy efficient • Poor, chopped-up design • Marginal locations

  16. Affordable Housing Becomes More Critical • Economy is changing and so is the demand for housing. • Higher paying jobs are being replaced by lower paying ones. • Product built in the 60s and 70s to house the baby boomers is obsolete in today’s market. • Not terribly energy efficient • Poor, chopped-up design • Marginal locations

  17. Fracking Compensation Compared to Local Pay • In 2013, fracking-related employees earned an average of nearly $75,000 per year • At the same time, local Ohio workers earned approximately $45,000 per year Sources: Ohio Department of Job and Family Services & Quarterly Economic Trends for Oil and Gas Industries

  18. Horror Stories of Housing Costs Skyrocketing 2-Bedroom/1.0-Bath apartment 2011 asking rent = $425/month 2013 asking rent = $1,800/month (furnished)

  19. Fracking Impact on Housing Source: 2010 Census; ESRI; Urban Decision Group; VSI

  20. Fracking Impact on Housing Source: 2010 Census; ESRI; Urban Decision Group; VSI Affordable projects experienced less fluctuations in occupancies and rents

  21. Future Trends • Economy and oil/gas exploration is wild-card • Senior specific-housing • Ex-urban senior housing. • In-fill • Affordable downtown for working class • Suburban ‘mini-downtown’ housing.

  22. Conclusions • Changing demographics are having profound effects on housing. • Apartment demand should remain high due to demands from the two largest demographic groups. • When will Gen Y move to single-family houses? • Can we meet the needs of older adults in the coming decades? • Is it economically feasible for developers to build more senior-tailored affordable housing in rural area?

  23. Andrew Mazak Vogt Strategic Insights andrewm@vsinsights.com www.vsinsights.com (614) 224-4300

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