Currently Reading

Welcome to the '20s

Advertisement

Welcome to the '20s

What's in store for home builders in the coming decade?


January 7, 2020
the direction moving forward for home builders
Illustration: Pixabay / geralt
This article first appeared in the January 2020 issue of Pro Builder.

As we move on from the second decade of the 21st century (yes, time does fly, even when you’re not having fun), a quick look back at the housing industry during the past 10 years reveals a period of time marked by much hard work and a tenacious determination to keep moving forward. The previous decade, the aughts, offered some highs of euphoria before socking the nation with the depths of depression, and feels now as if it were over in a flash. The ’10s are a different story; a longer one of starting over, reinventing, and rebuilding.

 

Advertisement

 

The Great Recession—the most severe economic event in the U.S. since the Great Depression in the 1930s—began in December 2007 and officially ended in June 2009. But it didn’t end there for the housing industry: Banks foreclosed on 1.05 million homes in 2010 and home prices dropped precipitously, with homes in some areas losing 50% of their value

Half of all U.S. home builders closed their doors between 2007 and 2012, and many of their employees left the industry for good. Job losses across all industries escalated. Workers’ earnings declined and fewer than half of the unemployed found work in 2010. Those who did earned considerably less than their former salaries. 

Recovery from the recession began in earnest in 2013 and has continued rebounding. But the downturn and its effects set the stage for fundamental changes in home building, homebuying, and consumer behavior in the remaining years of the ’10s. Here are just a few:

The Shift to Renting: Out of necessity, many households began renting rather than buying, and apartment construction increased from 9% of the total number of units built before the recession to more than 25% of the current total. There are now nearly 110 million renters in the U.S., more than a third of the population. And renting is not just for young adults anymore. The biggest demographic growth in renters has been among those 60 and above; the number of renter households in this age group increased 32% in the past 10 years. 

How Homes Are Sold: For those who are looking to buy, however, the days of engaging a real estate agent and having them conduct the search for a house are long gone. Zillow, Redfin, and Realtor.com have pried the information free for home shoppers, who now search available listings by neighborhood and price unfettered by intermediaries. And when they do find the home of their dreams, they can sell their current house to iBuyers—companies that purchase the home as-is and on the seller’s timeline—for just a bit more than the usual broker’s fee.

What Buyers Want: Following home design trends has become a hobby for many Americans, borne out by the continued expansion of the remodeling industry, which has grown more than 50% since the end of the recession. The proliferation of new trends has made it harder for production home builders to stay ahead of the next new thing, but new homes can offer important and desirable features most older homes cannot: energy efficiency, accessibility, lower maintenance, and a healthier environment. 

The new decade probably won’t roar like the ’20s of the last century. Its first few years are likely to be a continuation of the last few; beyond that is anyone’s guess. The short-term forecast is for a relatively slow market, slow but steady. The quest for affordability will require that square footage, for both lots and homes, continue its downward trend. The shortage of new homes will persist, and home prices will continue to rise, but at a slower rate. In answer, builders need to keep training their sights on their strengths and on what they can do in the here and now. In other words, keep on keeping on.

 

Access a PDF of this article in Pro Builder's January 2020 digital edition

 

Written By
editorial director

Denise Dersin, editorial director of Professional Builder, Custom Builder, PRODUCTS, NKBA Innovation+Inspiration, and co-editor of Multifamily Design+Construction, has been in publishing as an editor and writer for 30 years and has worked in the housing industry for much of that time.

Related Stories

Business Management

Home Building's Response to the Changing Times

As the way we live has changed due to the coronavirus pandemic, home builders are adapting and rethinking their businesses, from operations to sales to business management

Business Management

Home Builder Success and the Fragility of Good Things

All successful builders are alike. Each unsuccessful builder fails in its own way

Codes + Standards

Will GFCI Revisions for Manufacturers Confuse Trades?

The back and forth on changes for ground-fault circuit interrupters and revisions to UL 943 has the potential to affect not just the reputations of home builders, electricians, and manufacturers, but the safety of homeowners and consumers as well 

Advertisement

More in Category




Advertisement

Create an account

By creating an account, you agree to Pro Builder's terms of service and privacy policy.


Daily Feed Newsletter

Get Pro Builder in your inbox

Each day, Pro Builder's editors assemble the latest breaking industry news, hottest trends, and most relevant research, delivered to your inbox.

Save the stories you care about

Lorem ipsum dolor sit amet lorem ipsum dolor sit amet lorem ipsum dolor sit amet.

The bookmark icon allows you to save any story to your account to read it later
Tap it once to save, and tap it again to unsave

It looks like you’re using an ad-blocker!

Pro Builder is an advertisting supported site and we noticed you have ad-blocking enabled in your browser. There are two ways you can keep reading:

Disable your ad-blocker
Disable now
Subscribe to Pro Builder
Subscribe
Already a member? Sign in
Become a Member

Subscribe to Pro Builder for unlimited access

Lorem ipsum dolor sit amet, consectetur adipisicing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua.