This article reviews recent research into the desires of homebuyers, with particular emphasis on demographic shifts.

1. Tomorrow’s Home Buyer
By Michael Stumpf, September 2008
A
merica has been in a housing slump for cycle, many of them own homes. As they sell they
more than two years. While waiting for it will be adding an enormous inventory of existing
to bottom out it may be worth our time to housing to the market. There are fewer buyers in
look ahead and speculate on changes we may to Generations X and Y, which has led some people
see coming. Our notion of the American Dream is to expect a glut of homes for sale. Further compli-
quickly being eroded by rising energy costs and cating the issue, Generation X and Y buyers do not
generational preferences. These changes will im- want the same house as did the previous genera-
pact both builders and communities as we climb tions. Their preferences vary, but a majority favor
our way back to a healthy housing market. smaller homes with better quality finishes instead
of a large home. They also prefer active mixed-use
Perhaps there is no greater threat to housing price
neighborhoods instead of suburban tracts and
stability than the coming Boomer Sell-Off. Much
has been made of the fact that the first baby
boomers are entering retirement, but that has not
included much discussion about housing. As
boomers retire they will be selling their homes to
move into their final home. Research shows that a
majority of these newly retired boomers will not
be attracted to age-restricted retirement communi-
ties, or even be as inclined to move to the south,
as did their parents. Instead, most boomers will
prefer a detached home or condominium, often as
large as the home they are leaving. A look at many
new developments shows that developers are al-
ready responding to this demand.
But boomers are also the largest age cohort in the
U.S. population, and at this point in the housing
Place Dynamics
Michael Stumpf is a consultant in community planning, economic development, and
1 market analysis, based in New Berlin, Wisconsin.

2. large lots. As a result, many boomer homes, espe- veloping new housing for current and future gen-
cially in slow-growing parts of the country, may erations. O
lose value or linger on the market.
High energy costs are a more recent part of the © 2008 Place Dynamics
equation. At the end of June in 2005, just before
the housing market began to falter, the price of gas
was $2.21 per gallon. At that time, a median-wage
worker in the United States, commuting to work
the average distance, and having a car with aver-
age fuel economy would expect to spend about
$0000, or 00 percent of their income on gas just
for travel to and from work. At four dollars per
gallon that amount has increased to $0000, or 00
percent of the worker’s income. These and other
rising costs are causing many buyers to rethink
where they are willing to live. Perceptions that the
same money will buy more home at the urban
fringe are breaking down.
What should we expect when the economy im-
proves and people again start to buy homes? The
trends we are looking at suggest that locations
close to concentrations of employment will fare
better than rural areas or the urban fringe. Urban
locations offering convenient or walkable access to
shopping, restaurants, and entertainment may also
be popular choices, including the revitalized
downtowns of smaller communities along with
urban neighborhoods. This may lead to a surge in
redevelopment and infill projects, spurring eco-
nomic revitalization.
In short, the housing market may look very differ-
ent on the other side of the trough. There will be
challenges, but also opportunities to continue de-
Place Dynamics
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