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Friday, June 19, 2015


Architect Magazine Housing Editorial

Last month, I came across an editorial in Architect Magazine, titled 'All Grown Up and Nowhere to Go: Millennials are finally entering the housing market. Unfortunately, inventory is limited,' and wanted to share some of my thoughts about the piece as it relates to the Starter Home 2.0 project. Below is a transcript of the article, with my comments in red below.

'All Grown up and Nowhere to Go'
By Ned Cramer

Millennials can’t catch a break, or so the story goes: Graduated into the worst job market in living memory and saddled with unprecedented school debt, they are stuck in mom and dad’s basement without the wherewithal to buy a house of their own. According to John Burns Consulting, those student loan payments cost the housing industry $83 billion in sales in 2014.

Fortunately, the storyline may be changing. Bloomberg Business Week, The New York Times, and Money all report that as the economy improves Millennials will finally begin to pursue homeownership en masse. The catch, as young house hunters may discover, is that entry-level options, in the $200,000 range, are limited.
The common finding in all of the articles cited is that Millennials are equally, if not more interested, in owning a home than previous generations, it is just happening at a later age for them, which is the same case for marriage and parenthood. This compresses the timetable in which families will potentially outgrow a first home if it is not right-sized for a growing family like the Starter Home 2.0 project with 3 bedrooms and 2.5 baths.
Destination cities such as New York, San Francisco, and Washington, D.C., are simply priced out of reach. Concurrently, we’re witnessing the rise of the NORC, or naturally occurring retirement community. Boomers around the country are embracing the idea of aging in place and opting to remain in their homes, which reduces both resale inventory and the likelihood of remodeling jobs from recent purchasers.

The new construction landscape is just as grim. “More and more builders have been chasing that luxury and 55-plus buyer, and all of that stuff is at higher price points,” John Burns Consulting’s Rick Palacios Jr. tells Builder, ARCHITECT’s sister magazine, in an eye-popping feature titled “Are New Starter Homes History?” Furthermore, Palacios says, “It’s really difficult, given what land prices moved up to, for a builder to make that entry-level product pencil out.”

It’s not that home builders are avaricious. In his story, Builder deputy editor Les Shaver enumerates a host of factors that make the starter home a financial nonstarter, including zoning that prohibits density and the rising cost of materials, land, and labor.
I see this as more of a problem for large scale production home builders that have high overhead costs and rely on multi-lot greenfield developments and economies of scale to make their profits, rather than the small scale builders that are more equipped to take on scattered site infill developments.
So if the free market can’t meet the pent-up demand for starter homes, whether old or new, where are Millennials to turn? It’s tempting to imagine Good Design swooping down and saving the day singlehandedly, like Superman or Wonder Woman (but in an all-black unitard, of course).

There is precedent. As in 1927, when a league of 17 early modernists—among them Corb, Gropius, and Mies—industrialized the building type with the Wei├čenhof model housing estate in Stuttgart. Or in 1967, when AIA Gold Medalist Moshe Safdie wedded prefabrication and prehistoric settlement patterns at Habitat in Montreal. But neither would’ve been built had the architects’ radical ideas not aligned with the policies of the governments footing the bills.

Nowadays, architects must reconcile a myriad of powerful interests—not just those of the client, but of bankers, planners, community groups, the trades, and on and on. It’s a tall order, but it’s also an opportunity for the profession to take a leading role. Already, architects are poised to make major contributions, in areas such as prefabrication and energy harvesting.
This is why I am such an advocate for more architects to embrace the architect as developer role like I am doing on the Starter Home 2.0 project. My hope is to serve as the general contractor on future projects as well to continue to streamline the development, design and building process.
Demand for low-cost housing is only going to increase with time. According to a recent Better Homes and Gardens Real Estate survey of Post-Millennials aged 13 to 17, a full 97 percent of respondents believe they will one day own a home, and 82 percent say it is the most important part of the American dream. Architects can help make that dream a reality.