Supply is Meeting Demand
The expected “return to normal” after the pandemic has turned out to be anything but normal, with high interest rates, inflation, material disruptions and an unexpected war. The housing industry must once again tack to these influences with a focus on value, efficiency and creativity to appeal to potential buyers and renters.
Facing a worsening affordability crisis, buyers are considering room count ahead of square footage, making floor plans more efficient. We need to carefully consider every nook and cranny for smart flexible uses like storage or an office nook. In fact, during the pandemic we had to make do with carving office space into our homes; this work-from-home trend, at least part of the time, is here to stay and home designs must respond with flexible rooms or spaces. These flex rooms might be an office by day, a dining room by night. Three-story homes and townhomes are becoming standard housing types, but four-story homes are emerging to provide more space on less land.
Many new home (and even townhome) designs now incorporate Junior Accessory Dwelling Units (JADU). These can be rented out to help pay the mortgage, or can be used for family or as an office. This is an excellent example of flexible and creative design that is key to this transition.
As homes get smaller, the value of a master planned community with outdoor spaces, parks and trails becomes more important. However, the cost of operating these facilities as they affect HOA fees must be carefully weighed.
Smart homes will be getting smarter. The major technology companies have reached a milestone “Matter Standard” that brings some basic interoperability to home lighting, smart switches and thermostats, making it easier for people to use. This will have a big impact on televisions and other entertainment devices.
Photovoltaic (PV) solar in California is becoming more standardized, especially as more jurisdictions are outlawing the use of natural gas in new construction. This calls for simpler roof forms to provide generous areas for solar panels. Many builders are moving away from the recently popular roof decks and flat roofs for cost savings. However, preparing for a new all-electric future comes with requirements and provisions for future electric water heaters, dryers, home heating and cooking, along with increased electrical panel capacity and switchgear. Garages will get larger to provide space for solar batteries.
This transitional economy has further strained the housing crisis. The State of California has created numerous pathways to increase housing production but economic factors are working against these goals.
Mike Fratantoni is the Chief Economist, Senior Vice President, Research and Industry Technology of Mortgage Bankers Association.