If there's one takeaway from the gush of changes and challenges delivered by real estate gurus at the just-concluded Urban Land Institute Florida Summit in St. Petersburg, it is this:
If we don't smarten up the way we grow as a society . . .
If we don't better educate young people more quickly . . .
If we don't figure out how to ease the crushing debt falling on young people facing bleaker job prospects . . .
And if we don't manage our physical, fiscal and creative resources more efficiently . . .
Then tomorrow in America won't be very pretty.
A dire forecast? You bet. But there are some positive trends tucked amid the foreboding. Combined, it all means a Big Rethink for a Florida real estate industry that lives or dies by building homes, shopping centers and workplaces that people actually want and can afford in changing times.
Rising globalization, increasing competition, expanding innovation and leapfrogging technology are coming fast, says Maureen McAvey. She's the Urban Land Institute's senior resident fellow and co-author of the new report "What's Next? Real Estate in the New Economy" whose findings were highlighted at the conference.
"This is a not a cycle," McAvey warns while rattling off trend after trend. It's a theme echoed by many speakers at the conference. The good ol' days? They're not coming back, at least not as we knew them.
Ponder how these dozen look-aheads gleaned from conference speakers and attendees may affect — for better or worse — your own life, finances, home, education and work:
12. We're less educated than we need to be. In countries like Canada, Japan and Korea, 55 percent of their 25- to 35-year-olds have the equivalent of an associate's degree or hold skilled certification in industries from technology to plumbing. In the United States, only 39 percent have similar skills. In Florida, just 34 percent do.
11. Huge demographic changes are under way. On top of the well-publicized aging of baby boomers is the collision of the even larger Generation Y, ages 16 to 33, with a job market unable to absorb them. Gen Y's still growing, thanks to immigration.
10. Gen Y is poorer than their parents were, and less educated. Those who do graduate from college are often saddled with $30,000 to $40,000 in debt. Gen Y marriage, says McAvey, "is a merger of debt." What young couple already paying off a combined $60,000 or more in debt will be looking to buy a home?
9. Conservative mortgage lending has brought us back to the days when a 20 percent down payment is standard. If a typical Tampa Bay house now sells for about $134,000, that requires a $27,000 down payment.
8. More households are turning into multigeneration homes. Baby boomers share their homes with their elderly parents and their adult kids, who even as new college grads can't find jobs (or find only jobs that do not pay enough for them to be independent). Of the college class of 2008, 40 percent still live with their parents.
7. Owning things is losing some luster. More people are starting to share cars through services like Zipcar. More people are renting than buying homes in the wake of the collapsed housing bubble. Women rent rather than buy wedding dresses, while men can rent designer ties for $10 a month rather than purchase them. Students increasingly rent rather than buy high-priced textbooks.
6. The McMansion era is over (even as homes for the truly wealthy expand). For most of us, new housing is getting smaller as demand for urban residences rises and suburban housing eases. In 2007, the median size of a new home was 2,400 square feet. Now it's closer to 2,100 and probably still shrinking.
5. Office space allotted the individual worker is 116 square feet and getting smaller. At the same time, boundaries between workers are becoming less defined. Common space for collaboration and idea sharing is on the rise. Shrinking office space per worker may prompt rising vacancy rates in office buildings and a dropoff in future commercial office construction.
4. Retail Darwinism (experts call it "disintermediation") means more shoppers will go to stores to touch or test or try on products, but then shop online to find a lower price or a wider selection (of colors or sizes, for example). That trend helped drive traditional brick-and-mortar retailers like Circuit City, Borders and Linens 'n Things out of business. More stores face a similar fate.
3. Urban living is getting hipper as suburban living grows less inviting. Younger people want to walk or bike or use mass transit and rely less on cars. Interesting math: Dropping from a two-car to a one-car household saves $8,000 to $10,000 a year. That's enough extra money to fund an additional $100,000 in the purchase prices of a house.
2. Florida's GDP (gross domestic product) was an impressive $748 billion in 2010, putting the state fourth in the country. But the state's per capita income of about $39,000 was 27th among the states. That makes us a big population state full of lower wage jobs.
1. Post housing bubble, look for a cultural shift as more people view home ownership primarily as "shelter" rather than an "investment."
Changes, everywhere. Coming fast.
Robert Trigaux can be reached at [email protected]