As we look back on 2017, we see a fast-paced market with an expanding affordable-housing shortage, several tragic and costly natural disasters, as well as new regulatory and tax uncertainty due to proposed Trump administration policy.
But the consensus of real estate experts and analysts surveyed by ULI views a “sudden drop in altitude” as highly unlikely. Growth trends and an economic tailwind suggest an expansion of the current cycle, amid larger structural shifts in real estate.
Forget new billion-dollar tech startups: in today’s economy, the hidden gems are the mid-priced single-family homes that a cross-section of buyers can actually afford. No segment of the housing market has so many potential buyers. With Millennials entering the market, and baby boomers downsizing, the starter home market will continue to remain in demand.
Whether it’s urban row houses, transit-oriented development, or a new type of tract housing, practical and affordable mid-market homes, as well as starter homes and affordable rental units for young adults, remain potential goldmines for developers who figure out the right balance of price, land costs, location, and amenities. The higher-end market remains well-served. While margins are still good for those types of projects, building affordable housing at scale, in nearly any urban market in the country, would be welcome.