The U.S. housing market has begun to recover, and homes with amenities within walking distance will be those most in demand in coming years, according to a new report from the Demand Institute, a division of the U.S. Conference Board.
The Shifting Nature of U.S. Housing Demand, released May 15, examines the state of the U.S. housing market and the new trends emerging as real estate prices begin to recover from the recession.
Notably, the report predicts that areas with homes within walking distance of amenities and public transportation will recover more quickly and more strongly than those without these features. The report authors refer to these communities as “Resilient Walkables”:
About 15 percent of the population lives in this segment, which comprises populous urban or semi-urban communities well served by local amenities. House prices here fell by less than the national average between 2006 and 2011, in some cases by much less. The same is true of local employment…These localities will be the first to recover. We expect house prices here to rise by an average of 3 percent in 2013, and by up to 5 percent a year between 2014 and 2017.
By contrast, homes without access to public transportation and far from jobs or shops will recover the most slowly. The authors call this sector “Weighed Down”:
About 20 percent of the population lives in this segment, which will see the slowest rate of recovery. Price drops have been higher than the national average and there is a large proportion of foreclosure inventory. These localities also suffer from higher than average unemployment, are more sparsely populated, and have low walkability. The fact that housing is relatively cheap compared to the national average will not greatly assist recovery. Indeed, long-term prospects are most uncertain. We do not expect price rises to reach the national average even by 2017.
Demand remains high for homes in Resilient Walkable communities, and these findings reinforce the work already being done by LOCUS, Smart Growth America’s national coalition of real estate developers and investors who advocate for sustainable, walkable urban development in our metropolitan areas.
Despite the market momentum made clear in Demand Institute’s report, many local, state and federal policies remain at odds with the kinds of development consumers want. Incentive structures, tax credits, transportation investments and zoning regulations often make it easier to develop properties that wouldn’t qualify as Resilient Walkable. Those sorts of policies hinder developers from meeting demand for walkable housing, and hinder an industry key to economic recovery in the process. Public policy will partially determine whether and how consumers will be able to move to Resilient Walkable communities, and LOCUS members are working to clear the way for developers to meet these new demands.
Other noteworthy findings from the report include Americans’ growing preference for smaller homes, the growing role of young people in the real estate market, the growing role of rental homes and several factors related to each of these.
Download the full report: The Shifting Nature of U.S. Housing Demand [PDF]