The American Dream has always been synonymous with owning a home. But, the economic downturn battered the housing market, changing the industry dynamics.
The market is finally turning around, according to a study by the nonprofit consumer research firm, Demand Institute, released May 2012. “The Shifting Nature of U.S. Housing Demand” study predicts that forces behind the recovery will move economic activity (including retail and real estate demand) out of the suburbs and into city neighborhoods.
The recovery will occur in two phases, the study says. The first phase would involve clearing out inventory and meeting rental demands.
Young people and immigrants will accelerate the demand for rentals. More than 50 percent of people planning to move in the next year said they want to rent. Developers are listening. They will build more multi-story units, while investors will buy more foreclosed homes and turn them into rental units. This will help clear the foreclosure inventory and the oversupply of existing homes in the market.
Factors such as access to public transportation and amenities will also influence home sales.
The size of the American home will shrink. Baby Boomers and Americans living on a tight budget are expected to downsize.
So the new real estate market will see a demand for rental properties, smaller homes and for homes in vibrant communities close to local amenities, making the sprawling suburbs less attractive.
These factors, among others, are the reason the report predicts “the center of economic gravity will continue to tilt away from the suburbs and back toward urban areas.