In 2018, anticipate home-building will shift to the suburbs, according to a forecast recently released by Zillow. Cheaper construction costs, coupled with demand for entry-level homes, is expected to lead to increased inventory in the suburbs.
“We’re on the other side of the housing recovery, and the real estate market looks quite different than it did 15 or even five years ago,” says Dr. Svenja Gudell, chief economist at Zillow. “We have a huge generation entering the market. They really want to be homeowners, and they’re faced with an inventory crisis that leaves them with few options. Builders won’t ignore this hungry market, and we’ll start to see a rise in new construction at the more affordable end, instead of all the luxury buildings we’ve seen lately.
“However, builders are also facing high costs, so instead of adding density in cities where zoning laws and land costs often preclude affordable building, we’ll see the suburbs grow and expand outward.”
Fifty-one percent of for-sale homes are priced in the top tier, Zillow reports—for many millennials, unaffordable. Inventory is currently down 12 percent year-over-year. If builders follow the forecast, millennials in need of options and reasonable prices will make their way out of cities and into the suburbs.
Additionally, builds will be designed for generational preferences, the forecast predicts.
“New homes will be designed to be particularly appealing to the millennial and boomer generations,” Gudell says. “Wide hallways can make it easier to move in, as well as make it easier to navigate a stroller or wheelchair through the halls. Large drawers will replace cabinets, making it easier to access everyday items that previously were hard to reach.”
Along with construction will be remodels. Homeowners leery of a market in which they may not be able to play a part will renovate, the forecast projects.
“In most markets around the country, housing has become a game of musical chairs, and nobody wants to be the last one without a seat,” says Gudell. “Homeowners who are looking for a change will turn to remodeling and redecorating, instead of selling their home and facing the challenges of being a buyer in a sellers’ market.”
For more information, please visit www.zillow.com.
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