American Housing Future: Major Societal Shift Towards Multifamily
By Caitlin Jones
3 min read
By Marty Bell
Tax Credit Advisor, September 2009: The Bush Administration’s social experiment to move America’s single-family housing ownership percentage from the low 60s to high 70s has been a major failure, according to Linwood Thompson, a managing director of the national real estate brokerage firm Marcus & Millichap out of Atlanta, Ga. Looking ahead at the housing market and at the societal factors that will affect it, Thompson sees an overall shift starting towards a preference for multifamily housing.
Thompson, the featured speaker at the National Housing & Rehabilitation Association’s 2009 Summer Institute conference in Woodstock, Vt., described a rocky and changing real estate landscape to the 125 attendees. Combining statistics with observations, he said consumer confidence is at a 20-year low and predicted the recession will continue for another six to nine months. “We are in spending/taxation/inflation conundrum,” he said. “We are trying to strike a new balance between capitalism and regulation. Congress and the Administration are redefining major economic institutions and relationships.”
As head of the National Multifamily Housing Group at Marcus & Millichap, Thompson, a tall, imposing figure with a striking mane of wavy white hair, oversaw closings on 1,400 deals in 2008 alone. He believes the apartment investment market has diverged into two camps: (1) an inherent long term investment group; and, a (2) short-term transactional value group. He sees the current market as fractured and expensive, hurt by unrealistic return requirements from investors who are nervous about continued unemployment and just where an activist Administration and Congress are going. He expects the current investment malaise to continue for another 18-24 months.
Future Changes
At the same time, Thompson is looking ahead to 2030, when the U.S. population will increase by a third and there will be a need for 60 million additional housing units. He sees a society in which only one in five home dwellers will be a married couple with children, and one in three units will house singles or unrelated people living together. In addition, there will be 10 million additional legal immigrants. Much of the push for additional housing units will come from the current 78 million “echo” boomers or children of baby boomers.
“The future is urbanism and density,” Thompson said. “Multi-family development will be preferable to sprawl.” He pointed out that while American homes now average 2,200 square feet, the average size in the United Kingdom is only 800 square feet.
“The fastest growing industries are those with the lowest paying jobs,” Thompson said. “People are going to be working longer hours. They are going to want services, everything close by. So they will look to the cities. They will need affordable housing. And with more people in fewer areas, it will save the United States $100 billion in infrastructure.”
Thompson predicts, “Single-family housing may have been the driver of the American economy, but it will no longer be.”
He adds, “In the near future, housing will be viewed as shelter and not as an investment.”
