Since the great decline in real estate values and sales began in 2006 and 2007, real estate experts and commentators have been trying to predict just what a full recovery might look like. There is general agreement that the number of sales and the values of all types of real estate are not headed back to the peak levels of 2005 at any time in the near future, even after the economy improves and the unemployment rate declines. Forecasting what “The New Normal” will look like has become a popular activity in real estate circles.
Beyond the numbers, a larger discussion revolves around what qualitative changes in real estate development will occur as we grow out of the recession. Will there be fundamental changes in what gets built, where it gets built and what it looks like? We already are seeing trends emerge in increased development of rental housing, as well as a bifurcation in commercial real estate markets between stronger cities such as New York and Washington versus markets that have remained much sleepier.
Will residential developers respond to demographic changes and consumer desires by building more housing in transit- accessible, walkable neighborhoods? How can obsolete suburban retail space be repurposed to new uses? Will the strength of many downtown office markets as compared to lagging suburban markets continue, or is this just a temporary trend? Will home builders continue to build smaller homes, as they have in the last few years, or will economic recovery bring back the large tract house?
Data from NAR’s recent Consumer Preference Survey suggests that Americans are increasingly interested in many aspects of smart growth, such as access to public transportation and more walkable neighborhoods, while maintaining their strong desire to own and live in a single-family, detached house. In this issue of On Common Ground, we address what the new norm may look like and consider, “Are we at a tipping point toward smart growth?”