Most builders today are focused on the current housing market, just trying to keep one foot in front of the other. However, a group of builders and developers in the Washington, D.C., market gathered at a small conference late last week to contemplate "The Next Housing Market." The takeaways were clear: Placemaking in the future will be all about niche targeting. And in the District, that means get the baby boomers on board.

Dan Fulton, president of Fulton Research and Consulting, said that by 2010 the Washington, D.C., market will be in the throes of a major shift in demographics, as the population swell from the baby boomer generation moves into older age brackets. Bucking historical trends, household growth will shrink in younger age segments while growing in the 55-plus age segments. In fact, Fulton projected that by 2010, there will be more than 100,000 households formed in the 55 to 74 age range.

This shift creates enormous ramifications for the local housing market by increasing the demand for move-up homes. Fulton said he estimated that 45% of the housing demand from empty nesters will be for new homes. However, the existing home market will provide some stiff competition for new homes. Many of these people will have to sell their existing homes, flooding the existing home market with inventory, which will create a competitive pricing environment.

"You will have to find a way to differentiate new homes from existing ones," Fulton told builders in the audience. He suggested advanced home technologies and green or sustainable design as possible ways to create value for new homes in that environment.

Fulton also said growth in the existing home market will exert downward pressure on pricing, improving affordability. He said that was a plus for the market, in which he expected to see an increase in lower-income households. By 2012, there would be roughly 492,114 households making less that $35,000 per year in the metro D.C. market. Fulton said the combination of an aging population and lower-income household growth created opportunity in the market for builders to consider venturing into affordable senior housing. However, despite the perceived opportunity, Fulton noted that the greatest potential for new-home demand will be in the affluent move-up segment.

Learn more about markets featured in this article: Washington, DC.