126 million.
That's the number of American households the U.S. Census counts for 2017.
78.6 million is the number of families.
That's the number of new homes builders have sold to customers in the eight years--through 2017--since the Great Recession ended.
That's the number of apartment completions developers have brought to the multifamily rental market during the same time period.
All told, in eight years, in an economy that has added 18.2 million of private sector jobs to payrolls, 8.7 million in new households, and, lately, even some noteworthy household income growth, to boot, the housing recovery since the Great Recession developed, financed, built, sold or rented 5.34 million new homes in many new communities.
Not what many who make a living investing in, developing, designing, providing materials for, and building new residential construction might have hoped for following the massive value transfer and destruction that occurred in the latter part of the prior decade.
A couple of things to think about and take stock of before we choose whether to believe "the boom is over," as more and more media analysts and correspondents are reporting.
Looking at the data for the 8-year recovery, and you could easily say, "what boom?"
But let's pivot the visual for a moment and look at three phenomena of the current housing recovery that do not get enough attention or credit:
During the past 8 years, builders, investors, developers and their partners ...
- Created the rent-by-choice marketplace, designing and developing urban and infill, transportation oriented communities that people with discretionary means prefer over homeownership.
- Gave more value than ever to discretionary home buyers in terms of greater square footages, finer finishes, increased floorplan flexibility, higher energy performance, smart home features, and community amentities, etc..
- Created the single-family for-rent category, a catch-all for both rent-by-choicers and in-limbo-by-necessity because homeownership options--the price-ranges, the access to mortgage finance, and the access to down payment savings--hadn't aligned yet.
Each of those three phenomena speak to the fact that housing's recovery--for what it has been--has remained largely in the discretionary income economic brackets, geographies, industry sectors, and educational achievement levels.
This is why, among 126 million households, and almost 80 million families, market players are still barely bringing a million new housing starts of all types online each year.
The 125 million households that do not participate in what housing's market players are producing each year are testimony to a market, a sector, a business model, and an economic engine that is stuck.
The "missing middle" here is some share of those 125 million households, where an individual or a couple of adults is working, who are priced out of today's new residential market.
This does not discount the fact that housing's market player accomplishments--new homes and communities for 5.34 million, jobs for hundreds of thousands of skilled-, semi-skilled, and unskilled laborers, energy-savings and carbon reduction, and myriad other tangible and intangible contributions during that 8-year stretch all attest to organizations and individuals that know how to work wonders amidst constraints of all kinds, many of which are intensifying.
Legacy housing market players may look longingly at the business models, the access to capital, the like-ability, and the innovation trajectories of Silicon Valley for clues and solutions to jumping productivity barriers that constrain them.
By the same token, as we can now see in full flower, there are a few things Silicon Valley giants might do well to look at real estate, construction, design, and development as examples if they expect their meteoric ascents to lead to enduring success. Like, how to build trust-based relationships with people, with policymakers, and other stakeholders who may quickly withdraw support if that trust is unsound, or gets messed with.
What's important, especially at this moment in housing's recovery, is that people who work in all the associated businesses that produce more housing see themselves as "we," as part of an interrelated ecosystem of market players, community groups, local, regional, and national policy people, investment and lending entities, and all the other parts of a complex system that can learn from, course-correct, adapt, and improve, individually and as a "housing community."
We have choices to make.
- In what we do.
- In what we do differently.
- In what we choose to stop doing.
Some are looking at the current deceleration in housing market activity, wringing their hands, and fretting about how things may have turned from positive to negatively so fast.
Others are looking at 2019 and 2020 as part of a five or 10 year long-term growth strategic plan, and thinking to themselves, "we've got to get better." They're looking at traditional buckets of capital resources that went into successful residential construction firms and giving them a reality check. Advantaged cheap access to land, labor, and lending may have worked up to now as ingredients of a firm's ability to prosper in the field, but now, it takes a jujitsu move to access other kinds of capital--social impact capital, human capital, environmental stewardship capital, data capital--to bring to bear on up-and-down cycles in housing and real estate.
This is why we're getting together in Austin, at Hive, tomorrow. I hope to see you there.
