Well-known Yale economics professor and housing market analyst Robert Shiller published a fascinating article that appeared in the New York Times over the weekend titled, “Today's Dream House May Not Be Tomorrow's”. In the article Shiller highlights the idea that economic and demographic changes could have a dramatic impact on the future value of a home because they will dictate shifts towards new designs and types of communities, including continuing care retirement communities, or CCRCs. As an example he points to the rise in popularity of what he refers to as “walkable urban areas,” where residents can walk to work and restaurants. Studies suggest that such communities show the highest property values while outlying suburbs are losing appeal and value.
Shiller also suggests that there could be a rise in the popularity of renting, as opposed to owning a home. This is certainly due in part to the lingering effects of the recent housing market crash but also because renting, which tends to connote mobility, could actually begin to be “identified with a high-status lifestyle in the new economy.” (Indeed, the American dream can still be acheived by renters.) If this proves to be the case, owners of homes today could be impacted in different ways according to Shiller.
Yet he suggests that homeowners who seek to convert their homes to rental properties- in order to meet demand- should consider that many houses don't easily convert to rental properties. But here's what really got my attention. Shiller describes that one of the reasons why many houses won't easily convert to rental properties is that they haven't been designed to “foster their use as components of continuing-care retirement communities.” He describes that as the baby boomers age the demand for such communities will continue to grow- at the expense of convential housing.
While it is generally understood that the popularity of CCRCs and other retirement living communities will likely continue to grow as the senior population grows, it's less likely that many people have stopped to consider how the trend could actually impact the future housing market as a whole and particularly the future of the large suburban home. As Shiller concludes, it is plausible that “A broad change in thinking is ahead.” Smaller living quarters in more densly populated areas my well become more socially acceptable, thus holding more value for the future.
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