As Chatterson looks back on our in-depth analysis of the real estate market in Denver, as well as our market report on North America’s housing industry, and our other insights shared in 2019, we’re also looking to other experts for insight into what 2020 holds.
The consensus we heard:
A more level housing market across North America in 2020.
vancouver and austin top markets
One of our go-to resources is PWC’s annual Emerging Trends in Real Estate 2020 report. In Canada: Vancouver, Toronto and Ottawa are the top three major markets to watch next year, each fuelled by population growth and regaining balance with policies to discourage foreign buyers and ensure qualified mortgage holders. In the United States, Austin was ranked as the number one market, a city with the highest-projected population growth rate for the next five years among the 80 markets analyzed in the report. Other top markets include Raleigh-Durnham and Nashville, each with strong population inflows and increasingly diversified economies.
shifting towards rentals
Within the residential space, purpose-built rental continues to gain popularity for both millennials as a more attractive or affordable alternative to owning, and baby boomers looking to downsize. Although selling the community is important for any real estate endeavour, it is a top priority for rental developers. Although renters may sacrifice square footage and home ownership, they want buildings with community-focused activities.
millennial buyers continue to gain traction
A survey conducted by RE/MAX found that in Canada, “more than half (51 per cent) of Canadians are considering buying a property in the next five years, especially those under the age of 45.” This can be attributed mainly to the market adjusting to the mortgage stress test and older millennials entering their peak earning years. The CMHC predicts that new home starts are expected to stabilize in 2020, while home prices will recover due to increases in population and income. In recent years, affordability issues are creating greater favour for more moderately priced single family homes, with the price gap between multi-family and single family homes continuing to shrink across many markets.
Millennials are an important market in the United States as well. Data from Realtor.com shows almost half (46 percent) of mortgages in September 2019 were by Millennials, up 7 points from 2016 (39 percent), while mortgages obtained by Baby Boomer and Gen X continue to fall. Read Chatterson’s methods for marketing to millennials (link).
reimagining the ‘burbs
Members of ULI’s Suburban Development and Redevelopment Council discussed opportunities for suburban real estate development, including applying principles for redeveloping urban cores and applying them to the suburbs, including providing increased density, convenience, affordability, connection and placemaking. PWC recognizes a new term to describe suburbs looking to emulate the live/work/play concept of their established inner-city counterparts – hipsturbia with mixed-use, walkable, millennial-attracting developments.
shift away from car culture
Across the U.S., parking space takes up a large proportion of real estate – New York City has 12 Central Parks’ worth of on-street spots alone. New York City Council recently passed legislation that will change how New Yorkers get around, and the broader streetscape. In April 2019, New York was the first major U.S. city to implement congestion pricing, which places a fee on personal vehicles entering Manhattan below 60th Street between peak morning rush hour – 6 a.m. to 8 p.m. Although this policy doesn’t go into effect until 2021, this year will require a review of fees and tolling infrastructure.
Projects that look towards a car-free future include Culdesac Tempe, the U.S.’s first, from-scratch car-free neighbourhood coming in fall 2020. The community holds the first agreement between a city and a developer to build a residential community without residential parking. This 1,000-person community will include light rail that connects to downtown Tempe, the airport, and Arizona State University. Although residents will be banned from owning or parking a car onsite, Culdesac Tempe will be accessible for emergency vehicles, service vehicles, ride-shares, and a small fleet of car-share vehicles available for residents. As a mixed-use neighbourhood, limited parking with be on site for visitors and friends.
“By not having to design for cars, space is freed up for things like a park or for bike paths and walkways and retail and other things that people want to have at their front door […] “We expect what we’re doing in Tempe to set a precedent for a different type of development [and] many cities have already reached out to us about wanting to incorporate some of the things we’re doing in Tempe in other places.” – founder Jeff Berens.
Back in 2015, Calgary approved the first condo tower built without parking, the only one of its kind in Canada. Situated near light rail transit just east of downtown, the development offers ample bicycle parking and each unit was given credit for a car-sharing service. Without the cost of a underground parkade, the units were priced far lower than typical downtown condos, and over 650 registered for the 167 unit project.
the East Village is continuing forward thinking development with the construction of a transformative parkade set to complete late this year. The parkade will include five floors of parking stalls above one and a half floors for an innovation incubator, Platform, and half a floor of commercial and recreational space. Beyond the incubator, innovation lies in the future-proof design that anticipates autonomous cars and the subsequent decline of parkades: parking space is convertible to residential and commercial uses.
As quoted in PWC 2020 Emerging Trends Report, “We’ve always done it this way’ doesn’t cut it in real estate anymore. We need to find the best way to do it.” This is an important mindset for not only what developers choose to build, but also how we position and market homes and communities to demonstrate an understanding of the interests, and challenges, of our target buyers.
In 2019, Chatterson took concerted effort to reinvigorate our service offering within the real estate industry, refocus on what we’re best at, and find new ways for our clients to stand out and disrupt the market. In 2020, we will continue to create a new level of substantial differentiation in everything we do. Get in touch and we can talk about what not ‘doing what we’ve always done’ looks like for you.