For the Millennial buyer and the 50+ buyer, location and affordability seem to be driving factors for the multifamily market
BY GREGG TAYLERSON
We’ve probably all used terms like “supply and demand” and “location, location, location” at one time or another when discussing housing and home values. As interest rates look to gradually get higher, these ideals start to become more important to buyers as they either enter the market like the Millennial homebuyer or downsize like the 50+ buyer. This is especially true in the multifamily market. For the Millennial buyer, location and affordability seem to be the driving factors for the multifamily market. Millennials often desire a more urban setting, where mixed-use communities are prevalent and multifamily products make the most economic sense in denser areas. For the aging Boomer generation, downsizing will become more prevalent, and multifamily products will look to be the choice for this new 50+, empty-nester buyer.
Supply and Demand
2017 was a stellar year for residential construction. California, which always seems to have a constant shortage of housing, held 13 of the top 20 hottest housing markets at the end of 2017 and into 2018, according to Realtor.com. Multifamily housing construction took a front seat to single-family construction in 2017, and this will continue into the early part of 2018, resulting in more variety and availability of new homes. 2018 will see supply inching closer to demand, and, as most of the new single-family construction leans toward the higher-end markets, multifamily home construction can offer more chances and choices for homebuyers. To address the needs of increased demand, multifamily construction answers the call for higher density living by providing more units per acre, which, in turn, helps to ease costs. Multifamily home construction provides more opportunity to homebuyers, especially first time buyers, which is crucial as the Millennial homebuyer, to whom which supply and variety are essential, looks to comprise 43 percent of the market in 2018.
As mentioned earlier, Millennials (mainly those without children) tend to gravitate towards denser, more urban settings. This sector of buyer desires to live in close proximity to work, shopping, dining, and entertainment, where the ability to walk, bike, or take public transportation is essential. Multifamily products fill this demand for an increase in urban lifestyle. Urban settings are also great for the move-down buyer that wishes to live in more mixed-age communities. Boomers are bucking the aging trend by wanting to live in cities as well, where access to public transportation and amenities are more readily available. In fact, Boomers and Millennials share some of the same desires when it comes to housing, such as mixed-use living, ease of access to public transportation and shopping, and a demand for more affordable, efficient and sustainable living. Metropolis and Oceanwide Plaza in Downtown Los Angeles are just two examples of new high-rise, multifamily communities looking to fill the demand for urban housing. Both communities will be comprised of residential towers, retail space, pools, outdoor spaces, rooftop amenities, and luxury hotels. Along with an open-air retail center, Oceanwide Plaza will also provide a private two-acre park on the eighth floor!
As Millennials get older and start to have families, many will look to move out of the cities and into more rural settings, where family and community are important. Two examples of such communities are Esencia, located in the heart of Rancho Mission Viejo in Southern California, and the multifamily community of Affinity in Summerlin, Nevada, by William Lyon Homes. Esencia provides a great opportunity for the first time Millennial buyer by offering a selection of townhomes, as well as products for the 50+ move-down buyer like Vireo, a duplex cluster product with its own community building and bocce court! Affinity offers the buyer a wide selection of affordable homes, from duplexes to triplexes, to a 16-unit product in the most highly desirable area of the Las Vegas valley. Along with a private clubhouse that has a pool, gym, and community room, Affinity is a good example of a multifamily product that gives buyers the chance to purchase in a desirable community that may otherwise be out of reach, especially to first-time family buyers.
Trends to Look for in Multifamily Communities
- Creating spaces with features like outdoor fireplaces, dining areas, and a myriad of seating options for “chill spaces” that allow for interaction amongst the residents to help create a sense of familiarity and community.
- Elimination of the “concrete jungle” by providing more green space like pocket parks and planting areas.
- Indoor/outdoor space is essential. Where yards are not feasible, balconies and rooftop amenities are a must, as more and more cities are requiring outdoor “yard space”.
- Ease of access to public transportation, shopping, work, dining, and entertainment.
Gregg Taylerson is owner/creator of Napkin-Sketching: A Design Studio. He may be reached at firstname.lastname@example.org.