There’s no question that beautiful homes are just that, beautiful. As always, fashion and tastes are always changing. Like clothing, homes make a fashion statement. They have a life span. The gold door knobs of the 1980’s and 1990’s are replaced with the cleaner look of brushed stainless steel.
Colors like hunter green are out, and white subway tiles are in. Colonial style mouldings and trim are out, and clean lines are in. Thick pile carpeting is out and hardwood is in. Warm tile colours are out and cool colours like grey are in.
But fashion goes far beyond finishings. The large mansions of the 2000’s were in hot demand. Today, there simply are not as many buyers for those homes. It’s partly demographics. But it’s also tastes that have changed. The 5,000 square foot home on acreage is not selling as well as the more modern, smaller home in a walkable community with access to the local coffee shop, the art gallery, and the neighborhood gourmet establishment.
One of my clients is building two residential subdivisions in Asheville North Carolina. This area in North Carolina’s Buncombe County, draws retirees with its mild climate and Blue Ridge Mountain scenery.
Homes under $800,000 have been selling quickly. So much so, that there is a shortage at that price point. Many are electing to custom build. Mountain gated communities like Ventana are doing really well. Homes below $500,000 are flying off the shelf. Homes over $2M are sitting on the market. Last year, there were 32 homes in Asheville over $2M on the market, and only 16 of them actually sold. Asheville is a wonderful community. It’s very artsy with great restaurants. The town has earned a reputation as a food lovers haven. There are lots of craft breweries and converted industrial buildings. This is a story that is playing out all over the country.
A lot has been written about the growth in senior housing as baby boomers are aging. But the thing to remember is that all those people going into senior housing are coming from somewhere. What properties are they leaving behind? Boomers currently own 32 million homes and account for two out of five homeowners in the USA. The picture is pretty similar in Canada and other western nations.
The problem is expected to worsen in the next decade, as more baby boomers advance into their 70s and 80s, the age group where people typically exit homeownership due to poor health or death.
The problem is particularly acute at the high end of the market. About a year ago, Fannie Made published a report which takes a deep look at the problem from a demographics perspective. But you don’t need to be an economist to see the problem.
That brings us back to talking about fashion. Even assuming that there were enough buyers, which there aren’t. Even assuming that younger home owners could afford these larger home, and many of them can’t. Even if you update the home and get rid of the dated finishes and colours to match modern tastes, these homes are not in the most desirable locations for younger home buyers. Most younger home owners are not looking for such a large home. They want to be closer into the city. They want to spend their money on experiences, not accumulating possessions. The 1980’s and 1990’s were all about material possessions. Social values are changing and younger people would rather create memories than buy more stuff.