As Global Warming takes on additional prominence with each passing day, I foresee gradual but substantial changes in the real estate industry from a residential property standpoint.
Now, I believe that the world’s efforts must go beyond green to create the development of new technologies and usage applications that help us to leap frog where we are today. And we see this happening. As a result, I am optimistic that the world has the expertise and ability to innovate. Political leadership to accelerate or incentivize this process is another question I don’t delve into here.
In respect to the next several years only, here are some trends that I anticipate as they relate to people’s homes and how they choose to live:
- Migration to the ‘center of personal gravity’ – I anticipate that people are going to base their home purchase decisions more on their place of employment, schools and other key factors such as this than ever before. This is to reduce commuting costs in terms of fuel and travel time. Housing cost is a prime consideration here that pushes many out into other areas. However, with some of the anticipated trends mentioned here, I see this changing.
- Migration back to smaller square footage for homes. This is due to a couple of concerns. First, utility costs for electricity will increase year to year to create a more pronounced cost for homeowners trying to cool their properties. Given that temperatures in many areas are expected to rise and not fall, cooling costs can be expected to rise in the summer months as well as in the off-peak periods. Second, larger homes will see a decline in per square foot pricing whereby consumers are willing to pay even less per square foot given the home’s size. For instance, buyers may look at a 4,000+ square foot home today and shy away from going with a home that large for the reasons stated above. Tomorrow, that value may be more like 3,500+ square feet. The home is the largest expenditure one has in their monthly budget. So, for those that can see being quite content in a smaller home with a reduced mortgage payment and utility costs, they will choose to do so.
- Increased insulation – Many homeowners simply have the opportunity to improve insulation in their roof attic space and will choose to. Additional insulation for walls will be added as well. However, inspection of heating/air conditioning and crawl spaces with an eye to closing up gaps and air leakages will result in home owners being able to reduce their energy usage significantly. Much of the inefficiency in a home simply results from leaks in air lines and piping and gaps in insulation that allows the passing of cool/hot air.
- Solar power – Broader adoption of solar power will depend on the cost/benefit analysis to doing so. However, new innovations in solar can be expected to contribute to the affordability for homeowners to implement in the future. On a large scale, the vision of wide expanses of solar panels and solar farms in the Arizona desert to provide electricity is a growing probability. As well, companies are looking at how they can implement solar arrays on commercial buildings to take advantage of the rooftop space and an immediate local demand source for the energy output.
- Behavior – Better homeowner behavior to curb energy usage. We should expect to see landscape lighting times being reduced or lighting altogether turned off. I estimate that homeowners usage patterns will become much more sensitive to avoiding waste.
- Reduced water usage through elimination of expansive grass and vegetation areas, elimination of winter seeding activity, and collection of rainfall at the individual residence level. The latter here is something that will take much more emphasis and deliberate action to be of benefit in my local market. However, it stands to be an option for the watering of plants in other regions.
- “New Urbanism”- style community development – This is the development of close-proximity communities whereby homes, retail shopping, offices, etc. are combined with green elements to allow for minimal resource usage like automobiles, water usage, electricity usage, etc. An example of this is the Prospect New Town community in Longmont, Colorado. Another is Bradburn Village in Westminster, Colorado. However, these communities will likely be more centrally located for large sprawling communities. Some regional real estate markets will not find these concepts appealing. For instance, in the Phoenix housing market, these types of concepts can only be successful in central downtown areas. As one leaves the center, it is inexpensive for buyers to purchase single-family homes with backyards at a likely lower price point. The inherent difficulty with these concepts is their cost. There is typically a premium to buy into them.
- Slowdown of the consumerism model – Often forgotten by millions, there was a time when the products we manufactured and bought were made to last. I like to put it to people to think about something their parents might have had or continue to have and use that has been around for years. For instance, my mother had a washer and dryer, both of which functioned for almost 20 years. Today, we are told that an energy efficient washing machine has an estimated lifespan of 8-10 years. However, that unit costs 3x as much! I believe we will see a gradual desire on the part of consumers to choose products based on a real sense of quality and longevity. Most of the products purchased today are not expected to last and hence are considered ‘disposable.’
I have more thoughts on this and will add them from time to time. As well, getting insights from experts in the field is something I hope to include as readership develops here.
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