Is one of every five new homes you plan, design, develop, and build capable of accommodating a multigenerational household?
Yea or nay, we believe the question gets at a disconnect. Still predominant customer segmentation templates for new housing and community types don't take into account new emerging realities of how people make up households. How they want to live in their homes. Or, perhaps, how they have to live.
This fissure may not ruin any builder's 2018 performance in the cadence and pricing of your offerings, or 2019's for that matter. Our nation's jobs report this morning--and the impact that that data implies for younger adult household formation, family formation, and new home demand--will likely affirm solid progress across the board for home building in the next 24 months or more.
Still, assuming that high and deep demand for nearly every new-home type that hits the market now means that everything hitting the market now will continue to find demand three or five years from now has caused trouble in the past (circa 2007), and can do so again.
At least part of the challenge springs from the fact that the most important decisions on investment, design, development, land strategy, and construction are coming from people who've spent their careers learning to tell the difference between a fad, a trend, and a timelessly recurrent phenomenon.
Understanding each, for businesses whose entire model involves huge upfront investment, operations that leave little margin for error, and customers whose motivation ebbs and flows along waves of lifestages economic cycles, makes or breaks companies.
Getting back to the original question of whether one in five new homes you're planning, designing, and mapping into your subdivision projects could work for a family as a multigen floorplan, where does that fall into the fad, trend, timeless recurrent phenomenon spectrum?
Here's brand new multigenerational trend data from Pew Research that may or may not influence your thinking. Pew analysts D'vera Cohn and Jeffrey S. Passell write:
The number and share of Americans living in multigenerational family households have continued to rise, despite improvements in the U.S. economy since the Great Recession. In 2016, a record 64 million people, or 20% of the U.S. population, lived with multiple generations under one roof, according to a new Pew Research Center analysis of census data.
The Pew analysis dives sufficiently deep in its detail of the cultural--ethnic and foreign-born--and demographic patterns of multigenerational household composition. Among the characteristics that emerge, educational attainment factors importantly in the data benchmarks of multigens under one roof.
Young adults without a college degree now are more likely to live with parents than to be married or cohabiting in their own homes, but those with a college degree are more likely to be living with a spouse or partner in their own homes.
This point on education levels begins to come back to that underlying question for builders and their design, development, real estate, and community planning partners. What's a fad? What's a trend? What's a permanently recurring phenomenon reflecting timeless values?
Our view is that the answers to these questions are both critical, and they're not always and forever the same. We need to look at multigenerational living trends, single-family rental trends, tiny home trends, co-living trends, intentional community trends and try to get out of the mindset that what has come-and-gone in the past will come-and-go tomorrow, leaving those customer segmentation templates--entry-level, first time move-up, second move-up, luxury, and 55+--as the design and community development pillars that have stood the test of time and housing cycles.
Look at a couple of things.
As we prepared with the team on our Meritage reNEWable Living Home multigenerational project, we did research that revealed, solidly and dramatically, a deep-seated "why," underneath people's choice to live in a multigenerational household.
Money.
We've written here before:
The most important reason primary homeowners say they seek multigenerational features and functionality in their homes is for financial assistance, meaning having more than one generation living under one roof makes a difference in the attainability of the home. A fairly close second ranked reason (42%) is physical health, which ties to the first insight, given that aging parents frequently have current or future health issues to deal with.
We're guessing that the underlying financial factors that motivate families to want to stay in near proximity to one another are only strengthening as challenges surface around automation, robotics, data, and the future of work.
"For financial reasons" is a motivator we've only begun to recognize in an economy and social era that is in a profound pivot point, one where the clouds of present uncertainty will peel back stark reality in the next decade.
Already, retirement as we've always known it to look and retirement as it's likely to look are vastly different pictures, and the importance of those differences to home and community builders is critical--not later, but now.
BlackRock ceo Larry Fink writes here:
Many individuals across the world are facing a combination of low rates, low wage growth, and inadequate retirement systems. Many don’t have the financial capacity, the resources, or the tools to save effectively; those who are invested are too often over-allocated to cash. For millions, the prospect of a secure retirement is slipping further and further away – especially among workers with less education, whose job security is increasingly tenuous.
Here, in no uncertain terms, is the most important "why" underlying multigenerational living's future as more than a fad, and more than a trend. Here's the "why" of single-family for-rent as a housing type phenomenon. Here's the "why" of the reshaping of what has worked as segmentation principles of the past into what will work as the house and community types of tomorrow. And by the way, the future is now.
A happy Friday to all, and we hope this coming weekend is a big, beautiful, busy one for traffic, qualified traffic, and engagement between yourselves and would-be home buyers of today.