Reston Spring

Reston Spring
Reston Spring

Monday, December 12, 2011

Will Reston's TOD Housing Demand Follow California's Trend?

The Urban Land Institute (ULI), one of the premier urban design organization in the United States, has just issued a study looking at demand for housing in California.   These are the report's five principal findings:

First, the existing supply of conventional-lot (over one-eighth acre), single-family detached homes exceeds the projected demand for these homes in 2035. This finding does not mean there is no market for new conventional-lot homes in niche markets. It does mean that overall the expansion of the supply of conventional-lot, single-family detached homes would be in excess of current and projected demand (see figure 1).

Second, housing and neighborhood preference surveys indicate that Californians consider transit options to be far more important in choosing a location in which to live than the rest of the nation: 71 percent in California, compared with 47 percent nationally. The demand in 2035 for residences located within one-half mile of public transit stations—called transit-station areas, or TSAs (transit service areas)—will exceed the aggregate amount of current supply plus all new residential units built in these metropolitan areas between 2010 and 2035 (see figure 2 and table 1).

Third, through modest redevelopment that will happen anyway, existing developed land with nonresidential uses could be sufficient to accommodate all new jobs created over this period. In particular, existing and potential TSA development may have sufficient capacity to accommodate 7 million jobs, or more than enough to absorb all new jobs between 2010 and 2035 (see table 1).
Fourth, changing demographics in combination with changes in home mortgage finance will reduce the rate of homeownership in California by up to 5 percent from 2010 levels and perhaps by as much as 10 percent over the long term. A 5 percent  reduction represents a market condition where three-quarters of the demand for new housing in the state’s largest metropolitan planning organization (MPO) areas will be for rental housing. This demand should lead to an increase in existing residential units being used to house multiple or intergenerational households
as well as to a variety of hybrid or new housing formats, such as accessory dwelling units or new nontraditional multifamily housing options.
Fifth, these long-term market trends represent a directional alignment between the real estate preferences expressed by consumers and the greenhouse gas reduction objectives expressed by the state of California in the form of Senate Bill (SB) 375.
The vital points from these findings is that ULI anticipates an eight-fold demand in residential housing in TOD (or TSA) areas in the next 25 years (9.2M HUs--18.4M residents), but supply will only triple (about 3.5M HUs--7M people) in that timeframe.  In contrast, employment growth over the next 25 years is expected to slightly more than double (3.0M to 6.5M). 

If this kind of situation applies in Reston, current proposals to roughly balance incremental housing unit (HU) and employment construction could lead to a serious housing shortage and possibly an over-supply of commercial space in Reston's TOD areas.

UPDATE:  On December 14, KPBS, San Diego, published an article on the ULI report above titled, "Study: Single-Family Homes May Be History."  A couple of key quotes:
The study looked at California’s major metropolitan areas — including San Diego — and found that by 2035 the supply of homes in conventional subdivisions will far exceed demand. . .

 On the flip side, Nelson's study predicts that demand for town homes, multifamily units and small lots will far exceed the supply of these types of housing over the next 25 years. Demand for housing that's close to public transit will also outstrip demand, according to the study.
"The bottom line is that as many as 9 million households would like the option to live in locations served by public transit," Nelson wrote. "But today, only about 1.2 million California households can claim to have it."
The study relied on demographic, employment and housing trends, and surveys to develop its prediction for the future. Nelson said California is a bellwether for the rest of the country. . . .
 Click on the title above to read the rest of this article. The New California Dream, Nelson, ULI, 2011 

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