Housing preference analysis: we have too much large-lot housing, too little urban housing to meet demand

The chart above comes from Arthur C. (Chris) Nelson of the University of Utah, as reported by Rob Steuteville in his New Urban Network blog.  It compares three estimates of American consumer housing preferences – from Nelson’s own research, market analysts Robert Charles Lesser & Co. and the National Association of Realtors – to what we actually have now on the ground, as measured in the 2010 2009 American Housing Survey.  It shows that we have far more large-lot housing than we are going to want going forward, and considerably less small-lot and attached housing than we are going to want.

These numbers reflect the trends that I described last week regarding the collapse of the assumptions behind sprawl.  The expected result would be, in general, declining values for large-lot housing and rising values for more urban housing types, which is exactly what we are starting to see.  And, by the way, Chris Nelson has been following these trends for years, and actually predicted the foreclosure crisis before it happened.  So we should be paying attention.

I highly recommend Rob’s two-part series on Nelson’s research, as presented at a recent meeting hosted by the Lincoln Institute of Land Policy.  Among the other key findings:

• Don’t expect a full recovery of the nation’s housing market any time soon.
• Demand will grow, but the overwhelming majority will be from households without children (demand from households with children will remain more or less constant while other sectors grow).
• Retiring baby boomers, who form a dramatically increasing market sector, will move from single-family to multi-family housing.
• The portion of rental housing will grow while the portion of owned housing will shrink.
• McMansions on the urban fringe will be chopped up, formally or informally, into multifamily housing.
• While supply of transit-oriented housing will grow, it will not grow fast enough to meet demand (see second chart).
• “A big question is how the major builders — Pulte, KB Home, Lennar, Toll Brothers, DR Horton among them — will adapt.”
• Because of zoning codes and transportation systems that stand in the way, whether the market can adapt to changing demand will depend on “the nimbleness and vision” or public officials.

Rob’s excellent reporting may be found here and here.

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