The question is now not when or if the housing market will recover, because this nation still has net annual household growth of approximately 1.5 Million each year, but what form will this recovery take?
The household growth stimulating demand, coupled with the tightening of new construction supply will eventually lead to a backlog of demand. Once price adjusts, and demand is back ahead of supply, houses will need to be built. A key piece to this swing towards increased demand is the uncertainty associated to what types of homes will be constructed. The transition in the mindset of consumers, inspired by the recession, has led to a new era of conservatism which will challenge the housing models that emerged in the past decades – the McMansions and sprawl of suburbia may have reached its end.
The consumer is transitioning away from this excessively consumptive attitude and is looking for housing that will be sustainable, both financially and in a macroeconomic sense. These new homes will need to fit the household’s budget while being good for America as it attempts to reestablish a sustainable infrastructure. These macro-conscious consumers will usher in a new and still uncertain breed of home, as well as a rethink where they choose to locate. Will these homes be multi-family duplexes and 6 suiters built in the 20’s and 30’s? Or will they take the form of the mid-rise condos/apartments? In whatever form the future takes, it is certain to be more dense with the return of increased energy and transportation costs. How will developers and city planners create this future?
Through neo-urbanism. This transitioning concept is becoming mainstream throughout the nation, but before its implementation in Cleveland, we have some serious obstacles to overcome. Neo-urbanism is forcing issues that plague our center city and keep people from moving back into Cleveland – issues like education, crime, blight, and civic services disparities. These issues need to be resolved before this new wave of redevelopment takes place. The Cuyahoga County Land Reutilization Corporation (CCLRC) may prove to be key in this transition. While the CCLRC is limited in that it will do little to change crime statistics or school performance, which are critical factors when choosing where to live, it will grease the wheels on creating and re-purposing land befallen to blight.
The possibilities are endless as these households are forced into making the decision of where and how they want to live. Fortunately for now, these decisions are still a few years away as existing supplies are absorbed by already existing inventories, but that should not stop the planning for the developments of tomorrow today. A new era of thrift may be the United States’ first step towards recovery and stability.
Our city needs to prepare itself for this transition, ramping up efforts to eliminate neighborhood crime, seeking alternatives to currently failing public school systems and making sure the public services will be available to the re-developing pockets in Cleveland.
For more information, please contact our Real Estate and Construction Group at 440-449-6800.