Reston Spring

Reston Spring
Reston Spring

Wednesday, January 8, 2014

Aging Boomers to Boost Demand for Apartments, Condos and Townhouses, Real Time Economics, Wall Street Journal, January 7, 2014

Writing about a paper published by the Federal Reserve Bank of Kansas City, WSJ blogger
The single-family home isn’t obsolete, yet.  But the aging of the baby boomers could reshape the U.S. housing market and economy in the coming years." 

Here is a brief passage from the article:
Based on demographic trends, the country should see a stronger rebound in multifamily construction than in single-family construction, Kansas City Fed senior economist Jordan Rappaport wrote in the most recent issue of the bank’s Economic Review. (Though he also notes slowing U.S. population growth “will put significant downward pressure on both single-family and multifamily construction.”)
Construction of multifamily buildings is expected to pick up strongly by early 2014, and single-family-home construction should regain strength by early 2015. “The longer term outlook is especially positive for multifamily construction, reflecting the aging of the baby boomers and an associated shift in demand from single-family to multifamily housing. By the end of the decade, multifamily construction is likely to peak at a level nearly two-thirds higher than its highest annual level during the 1990s and 2000s,” Mr. Rappaport wrote. . .
“More generally,” Mr. Rappaport wrote, “the projected shift from single-family to multifamily living will likely have many large, long-lasting effects on the U.S. economy. It will put downward pressure on single-family relative to multifamily house prices. It will shift consumer demand away from goods and services that complement large indoor space and a backyard toward goods and services more oriented toward living in an apartment. Similarly, the possible shift toward city living may dampen demand for automobiles, highways, and gasoline but increase demand for restaurants, city parks, and high-quality public transit. Households, firms, and governments that correctly anticipate these changes are likely to especially benefit.”
Consistent with the Reston theme, "Reston for a Lifetime," the thrust of this article highlights the relative future strength of the multi-family home market, especially in urban areas.  The issue nationally and here in Reston, however, is and will be:  Will senior Restonians be able to afford housing in Reston's prospective urban high-rise residences near the coming Silver Line?  With existing Town Center condo listing prices averaging near $600,000 and rents running from $1,600-$5,000 per month, the opportunities for baby boomers or other seniors to retire in Reston's urban core are extremely limited. 

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