By Sally Duros
When Glen Hiemstra, founder of Futurist.com, looks 50 years into the future he sees inexpensive small houses.
Hiemstra spoke about the future of housing at the annual meeting of the Homebuilders Association of Greater Chicago. His charge was to shake up the paradigm for Chicago’s homebuilders and that he did.
“So who is going to build a product that costs half as much to build and is half the size of the product that’s being built today,” asked Hiemstra. “We won’t need 200,000 of these houses, we’ll need 20 million of them in the next 20 years.”
“Chicago is one of the two great cities in America: it’s between New York and Chicago,” he says. “It is just a beautiful, wonderful urban environment.” But he says, “Chicago has fallen prey to the desire to build cheaper housing by essentially believing that people should drive until they qualify.
“So now you’ve got this great exurban area that is too dependent on automobiles and too spread out.
“The next 50 years are all about turning all the exurban areas into mini-urban areas,” says Hiemstra, who is from Seattle, and also the author of Turning the Future into Revenue.
To do this and to do this profitably, Chicago builders need to know who will be buying the houses of the future and what they will want.
Midwest demographics bring two major focuses to the homebuilding industry. First, the population of young people that came after Gen X, those born in the 80s, who Hiemstra calls the digital natives.
“We have to ask ‘What kind of home will the digital natives want?’ ” Hiemstra says. “They are much more urban oriented. Much more digitally connected. Everything that they do begins on a wireless device or on the Internet.” That includes and especially includes buying a house, learning and researching.
“The Digital Natives will say, ‘I will never live in a suburban 3,000-square-foot house with a quarter or half-acre of grounds, and have to take care of that lawn.’ ”
Instead, Hiemstra says, they’ll say: “I want to live in the center of the village, or town or city. I’m happy with 800 to 1,000 square feet. Part of that is they are in their 20s, and it could change later.”
Numerically, the digital native group at 80 million is as big as the baby boom’s 76 million, but they are a smaller percentage because today’s population is 300 million vs. the 200 million during the 1967 boomer peak.
The digital natives combined with the aging of the baby boom is a double whammy, double impact demographic.
Today, the leading age of the boom is 61, Hiemstra says. “Most Midwestern boomers will stay here in the next 20 years,” says Hiemstra, who himself looks to be a 50-is-the-new-40 boomer. “That means we will go from 55 million over the age of 65 to more than 100 million people over the age of 65.”
In the Chicago area, “the choices boomers have for housing is the suburban house, with 3 extra bedrooms and a half acre. Or they can buy a half-a-million to a million-dollar condo in a high-rise in downtown Chicago,” Hiemstra says.
“Here’s where I see builders are not seeing the picture,” Hiemstra says. “Baby boomers and digital natives say they don’t want to live in a house that big.” Affordability is a big issue, too. Although today large, expensive houses are marketable. In the future they might not be.
Oddly, that’s exactly what futurists said 20 years ago. And look where we are today.
Thirty years ago, the average size of a family was four, living in a 2,400-square foot house. Today the family is two, living in a 3,500 to 4,500 square foot house.
“In this energy environment the big house makes no sense,” Hiemstra says.
Why were futurists wrong 20 years ago? Hiemstra didn’t hazard a guess, but I have one.
They didn’t foresee that real estate’s “exchange” value would swell as new software and investment vehicles pushed houses into a realm of “Supersize me!” luxury. Instead, futurists might have been calculating forward based on that old-fashioned, sentimental “use” value that sees a house primarily as a home. They also might have assumed a fundamental value of thriftiness characteristic of Depression-era home purchasers.
For Hiemstra’s vision to come true we’d need to see a cultural switchback to those old-fashioned values of house as home and piggy bank. It would have to be in fact and purchasing power, not just in image.
Hiemstra said that Chicago’s builders didn’t push back much against his speech. “Mostly what I got afterward were people who said, ‘Policy and zoning regulations are the major impediment to building the kind of housing we want,’ ” he said.
But Al Darwan, president of Buckingham Builders Corp. and president of the HAGC, told me that Chicago’s homebuilders are always anticipating future trends. “Things could change,” Darwan told me, “We are not doing mobile homes, but eventually we may.”
Credit: The Chicago Sun-Times -COPYRIGHT- 2007 Chicago Sun-Times.