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Effects of Demographic Changes on Housing Demand in the Washington, D.C., Region

Effects of Demographic Changes on Housing Demand in the Washington, D.C., Region. Presented to the M-NCBIA Volume Builders Council by : Len Bogorad Managing Director Robert Charles Lesser & Co., LLC 7200 Wisconsin Ave., Suite 750 Bethesda, MD 20816 LBogorad@RCLCO.com www.rclco.com. July 28, 2006.

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Effects of Demographic Changes on Housing Demand in the Washington, D.C., Region

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  1. Effects of Demographic Changes on Housing Demand in the Washington, D.C., Region Presented to the M-NCBIA Volume Builders Council by:Len BogoradManaging DirectorRobert Charles Lesser & Co., LLC7200 Wisconsin Ave., Suite 750Bethesda, MD 20816LBogorad@RCLCO.comwww.rclco.com July 28, 2006

  2. CHANGES AFFECTING FUTURE RESIDENTIAL DEMAND • Generational shifts • Changing household types • Income • Race/ethnicity • Immigration • Summary

  3. CHANGES AFFECTING FUTURE CONSUMER DEMAND • Between 2005 and 2010, the Washington, DC, region will grow by 466,000 persons and 172,000 households. • Who are they? • Where will they live? • How will they live?

  4. CHANGES AFFECTING FUTURE RESIDENTIAL DEMAND • Generational shifts • Changing household types • Income • Race/ethnicity • Immigration • Summary

  5. ECHO BOOM NOT AS DRAMATIC COMPARED TO GEN X Fewer retirees in DC than in Nation Impact of Baby Boomers moving to retirement – enough retirement housing? Echo Boom not as significant in DC as nation Approximately 50% of Echo Boom is minority in DC MSA SOURCE: Claritas, Inc.; 2005 Estimates

  6. YOUNGEST POPULATION LOCATED IN CLOSE-IN SUBURBS Areas where the median age is under 30 (2010) Similar pattern to where large percentage of HHs are renters Fort Meade Andrews Air Force Base Fort Belvoir Quantico Marine Corps Base SOURCE: ESRI

  7. IMPACT ON RESIDENTIAL Population Growth Between 2005 and 2010 SOURCE: Claritas, Inc.

  8. NAHB TRADE-OFF QUESTION • Question: …You have 2 options: buying a $150K TH in an urban setting close to public transportation, work, & shopping. Or, you could purchase a larger, detached SF home in a suburban area, with longer commutes to work. • Percentage Preferring a Town House in City • Overall average = 17% SOURCE: NAHB Smart Growth survey 1999

  9. BABY BOOMERS • Youngest Boomers – families • Value “family-friendly” environments (nature & water) • Middle Boomers – Empty Nesters • Locations close to employment, amenities, and services • Second homeopportunities • Value nature-focused, environment sensitive communities • Oldest Boomers – “retirement” • Age-targeted and age-restricted communities • Lifestyle, amenities, minimal maintenance (nature & water) • In-town living and/or traditional neighborhood design • "Close-to-home" communities • Single-story designs or primarily main-floor living • Universal design features, done with character, to enhance appearance and functionality

  10. GENERATION X • Housing and communities that cater to ethnically diverse market • Sophisticated designs – a trade-off for lot size • Go virtual – communicate and inform online • Value “family-friendly” environments and social connections: • Safe for children • Know neighbors and they look out for each other • Good schools, ideally on-site

  11. ECHO BOOMERS • Locations • Urban, infill locations (or bring infill environment to them) • Placemaking – excitement, sense of “place” • Public transit options • Amenities – bark parks, fitness centers, community arts centers, and pools • Look beyond “conventional” home products • Individual expression • “Off-beat” • Cater to an ethnically diverse audience • The most connected generation – everything is on-line

  12. CHANGES AFFECTING FUTURE RESIDENTIAL DEMAND • Generational shifts • Changing household types • Income • Race/ethnicity • Immigration • Summary

  13. GROWTH IS IN HOUSEHOLDS WITHOUT CHILDREN Only 1 in 15 new households in the region will have a “traditional” family make up (e.g., married couple with children) Echo Boomers drive growth in non-family households (1,000s) SOURCE: Claritas, Inc.; PUMS

  14. NON-FAMILY HOUSEHOLDS CONCENTRATE IN CORES Areas where over 33% of HH are non-family (2005) Suburbs primarily families Non-family HH in the District, close-in suburbs, and along transportation cores University of MD La Plata SOURCE: ESRI

  15. FAMILIES STILL IN OUTER SUBURBS Areas where family growth is over 2%/year (2005-2010) Outlying suburbs should feature family-friendly products and amenities Can families live in the inner city? SOURCE: ESRI

  16. IMPACT ON RESIDENTIAL Household Growth Between 2005 and 2010 SOURCE: Claritas, Inc.; PUMS

  17. Product Fewer extra bedrooms Creative living spaces More architecture, less “sameness” Balance price and lifestyle Sense of community Location Urban, infill locations Live, work & play – all in one Active communities – “3rd Places” Willing to pioneer new areas Less concerned about schools Single females prefer established and safe locations Access to retail and public transit when possible ROOMMATES, SINGLES, AND COUPLES WITHOUT CHILDREN

  18. MARRIED COUPLES WITH CHILDREN • Suburban locations • Single-family detached homes • Room for the nanny • Families with younger children • Playgrounds and parks • Schools for younger children inside the community • Families with older children • More trail and park amenities • Nature and environmental conservation amenities • Quality education options, the quality of the district is more important than the location

  19. CHANGES AFFECTING FUTURE RESIDENTIAL DEMAND • Generational shifts • Changing household types • Income • Race/ethnicity • Immigration • Summary

  20. HIGHEST MEDIAN INCOME IN FAVORED QUARTER Areas with median income over $150,000 (2005) Columbia 2005 Median HH Incomes: DC Metro: $72,000 US: $48,000 Annapolis SOURCE: ESRI

  21. INCOME GROWTH STRONGEST IN WESTERN AREA Areas with income growth over 5%/year (2005-2010) N. of Gaithersburg Around Leesburg Annapolis SOURCE: ESRI

  22. 1/3 CAN AFFORD A HOME PRICED OVER $460,000 SOURCE: Claritas, Inc.

  23. IMPACT ON RESIDENTIAL • Over 50% earn >$72,000/year = ~$340,000 house • How to handle disparity? • If so much of the HH growth is non-families, how does that impact the equation and affordability debate? SOURCE: Claritas, Inc.; National Association of Realtors, Hanley Wood Market Intelligence

  24. CHANGES AFFECTING FUTURE RESIDENTIAL DEMAND • Generational shifts • Changing household types • Income • Race/ethnicity • Immigration • Summary

  25. THE REGION IS BECOMING VERY DIVERSE 149,692 97,119 Largest growth in Hispanic population Strong growth in Asian groups as well 97,119 68,677 116,856 Note: Other includes Native Americans, multi-racial persons, and other singled race persons SOURCE: Claritas

  26. HISPANIC POPULATION CLUSTERS IN CERTAIN AREAS Areas where over 25% of population is Hispanic (2005) Hispanic population tends to concentrate in Silver Spring/Langley Park, MD and Arlington/ Fairfax, VA Strong growth in Hispanic population will follow where there are already concentrations Silver Spring Reston/Herndon SOURCE: ESRI

  27. AFRICAN AMERICANS CONCENTRATE IN EAST Areas with over 25% of population is African American (2005) African American population tends to concentrate in the eastern portion of the region Culpeper SOURCE: ESRI

  28. ASIANS CONCENTRATE IN WEST Areas where over 20% of population is Asian (2005) Major concentrations along highway corridors – out I-66, down I-95, and up I-270 SOURCE: ESRI

  29. IMPACT ON RESIDENTIAL Population Growth Between 2005 and 2010 SOURCE: Claritas, Inc.

  30. CHANGES AFFECTING FUTURE RESIDENTIAL DEMAND • Generational shifts • Changing household types • Income • Race/ethnicity • Immigration • Summary

  31. 17% OF THE REGION’S POPULATION IS FOREIGN BORN In some counties, foreign born are over 1/4 of the population 17% of PMSA residents were foreign born in 2000 Largest % in closer-in suburbs 25% 27% 14% 13% 28% 11% 11% % Foreign Born SOURCE: Claritas, Inc.

  32. FOREIGN BORN POPULATION INCREASED DRAMATICALLY 1/3 of all pop growth between 1990 -2000 in PMSA was foreign born Growth rate in foreign born outpaces native born in all areas The farther out suburbs are seeing the highest rate of growth SOURCE: Claritas, Inc. Source: Brookings Institution

  33. FOREIGN BORN CONCENTRATE OUTSIDE THE DISTRICT Areas where over 25% of population is foreign born (2000) Major concentrations in Northern Prince George’s County, along I-270, and Fairfax & Arlington counties SOURCE: ESRI

  34. IMPACT ON RESIDENTIAL • Inner cities no longer the gateway for immigrants • Immigrant populations tend to concentrate in certain areas • Often rental at first • Multi-generational • Differing product preferences • Impact on schools • Bilingual signs, staff, agents • Denser residential product • Active real estate investors

  35. CHANGES AFFECTING FUTURE RESIDENTIAL DEMAND • Generational shifts • Changing household types • Income • Race/ethnicity • Immigration • Summary

  36. BOTTOM LINE • Desirability of urban, infill locations • Singles & couples • Gen Y, Baby Boomers • Minorities and immigrants • Gen Y • Urban & pioneer locations • Different amenities • Renters • Internet marketing • Gen X strong in DC – starting families • Baby Boomers moving towards empty nests & retirement • Outlying suburbs still dominated by SFD & families

  37. BOTTOM LINE • Disparity between income and home price is here to stay • Singles and couples have no trouble living in attached housing • Improved schools, safety, may encourage families to live in-town • Immigrants homeownership rate is rising – who will serve them? • Rise of immigrants, minority households • Different product preferences? • More urban • Impact on amenities • How to encourage home ownership among minority households?

  38. Effects of Demographic Changes on Housing Demand in the Washington, D.C., Region Presented to the M-NCBIA Volume Builders Council by:Len BogoradManaging DirectorRobert Charles Lesser & Co., LLC7200 Wisconsin Ave., Suite 750Bethesda, MD 20816LBogorad@RCLCO.comwww.rclco.com July 28, 2006

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