We don’t just need more houses, we need more of the right kind of houses
IndyStar column by Laura Musall
By Laura Musall
A few weeks ago, I showed some houses to a couple from Illinois who want to downsize to a single-story home in Fishers near family. They want a two- or three-bedroom home in a neighborhood where they can play pickleball, be close to hiking trails and grocery stores and meet new friends (and neighbors) who are in the same stage of life.
Sounds pretty simple, right?
It’s not.
They really liked a new home under construction in Fishers, but there was not a single community amenity, such as walking trails, club house or recreation. They liked Britton Falls, the 55-plus Del Webb community on the northeast side of Fishers, which has sports courts, a fitness center, pools, social clubs and more, but there were no homes for sale. There were some homes for sale in Kimblewick, also a Del Webb community, and in Osborne Trails, a 55-plus development by Lennar, which each had pickleball, social clubs and workout rooms, but they’d be about 30 minutes from their son and his family. They drove back to Illinois to think about it.
This illustrates one of the big challenges of our housing market. We don’t have enough homes to meet demand, and, more importantly, we don’t have enough of the kinds of houses buyers want. Because we don’t have enough of the right kinds of homes, we have people crammed in houses they’ve outgrown and others in houses that now are too big for them, since the kids have moved out. Lots of these homeowners would like to upsize or downsize, but options are limited, especially if they want to stay in their community. So, they are staying put, at least for now.
Because they aren’t moving, it’s adding to our housing shortage. Investors have been gobbling up houses, too, which causes even more competition.
Sure, there are new subdivisions going up all the time, however, my concern is that homes being built —most with price tags starting in the $400,000s and $500,000 — aren’t affordable for the majority of buyers. If we continue this trajectory, we could be in for a rude awakening, according to a new report from the Indiana University Kelley School of Business’ Indiana Business Research Center in collaboration with IU Center for Real Estate Studies, “Generational Housing Bubble is on the Horizon.”
Housing built now to meet today’s demand may sit vacant in a decade, because the real estate market is going to shift, according to the study. We can blame millennials. They aren’t having as many babies, and they aren’t going to want or need four- and five-bedroom houses. At the same time, baby boomers and Gen Xers will be downsizing at an even faster clip, which means more big houses on the market.
I called Sara Coers, associate director of the IU Center for Real Estate Studies, to learn more about the new IU study. I was especially curious about potential solutions, so empty nesters can downsize, young people can afford to buy their first house, and people transferring here can find a house. Coers explained that there are no easy answers because there are so many variables in the housing market.
The Indy metro area is not unique to the housing affordability challenges. But, according to Coers, it’s only going to get worse if inflation continues to outpace wage growth.
There has been this perceived notion that younger generations don’t want to own a home, Coers said. That’s as outdated as a formal dining room. Younger generations want to buy, they just feel overwhelmed by the market and worry it won’t be attainable.
Builders are still trying to catch up with demand, but we must be careful about how much new building occurs and the type of homes being built. Let’s keep in mind that Gen Z (those born from 1995 to 2009) is the smallest generation ever and the Alpha Generation is even smaller. Plus, families are getting smaller, too. Instead of searching for the traditional four-bedroom, two-and-a-half bath home, they are going to look for more compact, energy efficient homes, Coers said.
The market is going to continue to shift, and those in charge of making decisions about the kind of housing a community needs should focus not just on what we need today, but what we are going to need in a decade or more. Instead of focusing on more apartment complexes, which bring in more tax dollars than single-family homes, leaders need to think about the future.
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Suburban communities have been aggressive about courting families, but it makes me wonder if anyone was thinking about where homebuyers like me were going to live after their kids left the nest and stairs got harder to climb. There aren’t a lot of choices if we want to stay in the communities we love, in houses that fit our needs that are near grocery stores, hospitals, grandkids and pickleball courts.
Want more tips on getting your house ready, or even what to do to make improvements to increase your home’s value? Give me a call at 317.702.0058 or laura@talktotucker.com.