New Trend in Affordable Housing

The trend toward smaller is not isolated to the tech industry.  Even the housing industry is getting on board.  Micro-housing, one of the hottest new trends in affordable housing, is coming to Portland.  Micro-housing is moving into the mainstream and shaking loose from it roots in architectural whimsy. With monthly housing costs taking up a larger and larger portion of people's monthly income, many Americans are looking for different housing options.  Obviously, many are turning to multi-family apartments.  Others, however, are seeking a more creative alternative.  One such alternative is micro-housing.  Micro-housing may be catching on.  One such development by home builder, DR Horton, in Portland, Oregon is embracing the micro-housing concept and is spotlighted in the video below.  Micro-houses are very small, typically between 300 and 800 square feet.  In essence, this development site in Portland is 15,000 sq. ft. and consists of 29 units.  This represents an incredibly efficient density.  This site is also being promoted as environmentally friendly where homenowners prefer to ride bikes and mass transit as opposed to driving cars.  In fact, these homes do not have garages.  Micro-housing is already popular in densely populated countries such as Japan and could catch on in urban areas in America where higher densities are feasible and costs of home ownership and leasing are very high.  Situated close to light rail, these homes could provide an affordable and eco-friendly alternative to people seeking to own versus rent, especially in areas where the cost of housing has skyrocketed.  At $300/SF, the price for these micro-homes in Portland seems very steep especially when compared to home prices in Texas.  As a result, most of Texas is probably not well-suited for micro-housing.  This model could gain momentum in some regions of the US.  Micro-housing is certainly an intriguing idea that might appeal to certain buyers, perhaps those just starting out or those looking to downsize.  Following this emerging trend will be interesting.

New Technology Changes the Face of Real Estate

Web 2.0 - The New Real Estate
Marketing Landscape

The technological innovations and advancements that have been made over the last two decades are amazing.  The Internet has become accessible to most Americans.  In fact, access to the Internet is growing across the globe.  Social media sites like Facebook and YouTube are playing a role in how crucial events are unfolding.  The protest movements going on right now in the Middle East are a good example.  In addition, powerful computing is getting smaller and smaller all the time.  Phones, netbooks, and tablets are rapidly replacing heavy and cumbersome laptops with little to no loss in computing power.  In addition, texting is replacing, to a large degree, the need for email.  The real estate industry is adapting to these new technologies like QR codes and cloud computing.  According to a Bloomberg BusinessWeek article, the projected market for cloud computing in 2014 is $149b.  Companies such as Netflix and Zynga currently utilize the cloud to manage high volumes of Internet traffic.  Also, the same article from Bloomberg Business Week suggests that Amazon's Web Services, which rents out computing power for pennies an hour, will level the playing field for small business owners, giving them access to the same kind of world class access to computing power as very large companies. 

This type of innovation is very exciting.  It means that small to medium size companies will be able to compete more efficiently in a consolidating business climate where a smaller and smaller number of companies are gaining control over industries such as banking and finance.  Although real estate professionals have historically been slow to embrace new technology, most now acknowledge that there's no turning back.  Both commercial and residential real estate are adopting the Internet, video, and social media like never before.  Residential is leading the charge by using smart phone apps, virtual tours, IDX, and social media.  However, commercial brokerages are beginning to embrace these opportunities as well.  Static websites are no longer enough to keep you on the cutting edge.  Everything is moving toward an interactive experience on the web.  Customers are demanding it. 

QR Code

Change is inevitable but it's important to keep in mind that technological advancement and its application are generally positive but negative consequences exist as well. The main one being a loss of interaction between business providers and their customers.  Some companies, such as Zappos, have managed to provide a great online customer service experience.  Many companies, however, have yet to achieve the right formula in the real estate world and beyond.  Figuring out the right formula is more challenging than might be expected.  Those companies that figure out the right blend of personal and online customer interaction will be the most successful businesses in the future. 

Green Gains Ground

The trend toward GREEN in real estate is gaining momentum in the US and abroad.  Driven by the US Green Building Council and new legislation at all levels of government, many real estate professionals are seeing the writing on the wall.  Go GREEN or get left behind.  Whether this is a trend that will last or simply a fad remains to be seen, but the GREEN movement is impacting real estate perhaps more than anything else.  Sustainability, or the ability to endure, is the foundation of the GREEN movement.  The GREEN movement's influence in real estate stems from the fact that buildings are the single largest polluter of our environment.  Buildings emit pollutants such as carbon dioxide into our air, a major cause of air pollution and global warming.  Buildings also utilize natural resources both during and after the construction process.  As a result, it makes sense that if we construct buildings to be more water and energy efficient, we will help the environment endure or be more sustainable.  The US Green Building Council offers a LEED Certified, Sliver, Gold, or Platinum designation.   Obviously, LEED Platinum designation is the most coveted designation and signifies a building is very energy and water efficient.  The Bank of America Building in downtown New York (shown in video below) is seeking a LEED Platinum designation. 

The Trend toward Home



Old-Fashioned Drive-In Theater

Home is where the heart is and so on and so on.  These days, the home is headquarters to millions of consumers and employees.  The home is no longer simply where we raise our families.  It's much much more.  Think about the drive-in theater whose day has come and gone.  Sure, there are a few drive-ins scattered around the country but this once popular past-time has been replaced by giant multiplex theaters with stadium seating and Dolby digital sound.  Even these giant theaters might soon go the way of the drive-in as companies that offer DVDs in the mail such as NetFlix and on-demand video becomes more widespread and takes center stage.  The trend toward home entertainment mirrors a broader trend toward the home as a one-stop shop.  In many ways, the home is becoming the central nervous system.  It is now possible for someone to order just about any good or service from the comfort of their own home.  In addition, many higher end homes have become mini-resorts where people can swim in a resort style pool during the day and then watch a movie on a big screen at night.  As homes becomes more intelligent and the Internet continues to make previously unavailable options available to consumers, the trend toward home will continue to impact real estate. 

Modern In-Home Theater

For instance, modern movie theaters now have to compete with state-of-the-art in-home theaters and resort vacation destinations now have to compete with staycations as people can practically take a vacation in their own backyard.  Traditional office space is also having to compete with the home office as modern technology has made it possible to telecommute.  Email, text, video-conferencing, and high-speed Internet connections allow more people than ever before to work from home.  In 2000, it is estimated that 4.2 million people worked from the home all or part of the week.  By 2008, that number had grown to approximately 17.2 million people working from a remote location such as a home office.  Today in 2011, the trend is growing and more people than ever before are telecommuting.  The implications of these trends are having and will continue to have an incredible impact on traditional bricks and mortar commercial space.

Online Education - A Growing Trend

Another growing trend in the US and around the globe is online education.  In the US, it's even possible for a person to graduate from high school without ever setting foot in a traditional classroom.  Hundreds of millions of dollars are being spent to make online education accessible to the consumer.  Everything from courses required for a college degree to a real estate license can be completed online.  In spite of all this convenience, however, most people still choose to attend traditional schools and still want to shop at stores.  However, the trend toward online retail is booming.  According to BizReport.com, Internet sales reached $156B in 2009.  In some instances it seems that consumers still want to touch, see, and hold the merchandise before they buy it.  Grocery stores are a good example.  Book stores, on the other hand, are not faring so well.  Digital readers such as the Kindle and iPad are more sustainable options than traditional books and they don't require as much space as paper books.  People are embracing digital books like never before.  Only 14% of print book readers now say they will never try a digital book and 26% of adult book readers are already reading digital books.  This trend toward digital books will continue to grow.  From online shopping to online education, it's clear that advanced technology in the home and the workplace is reshaping how we live, work, and play.  It's easy to see a future where the home, in tandem with modern technology, will become the commercial hub for millions of Americans, altering the real estate landscape forever.  

The Rise of the Automobile

Car of the Future - Electric Powered

America's enduring love of the automobile has shaped real estate perhaps more than any single factor when combined with the interstate highway system.  The auto industry has been America's sweetheart since Henry Ford's first Model-T rolled off the assembly line in 1908.  Ten thousand Model-T's were sold the first year.  48 years later, in 1956, President Eisenhower passed the National Interstate and Defense Highways Act and American life and real estate in America was changed forever.  The ambitious goal was to build 41,000 miles of highway over 20 years.  $25B, a tidy sum for the day, was set aside to accomplish this grand endeavor.  The result: automobiles gave rise to mobility and the new freeways made it possible for Americans to hit the open road.  And they did so en masse.  In 1929, there were 23M cars on the road.  By 1960, there were more than 74M cars on the road, a 222% increase in 31 years.  Today, there are 250M registered vehicles in America -- that's incredible!  As a result of this increase in automobiles across the US, the real estate landscape has changed dramatically.  For better or worse, autos have had a major impact on American culture, including real estate. 

The result: America witnessed the birth of:

Shopping Centers/Malls

Original Tract Home Subdivision
Levittown, USA

Suburban Housing Developments                                             
Fuel Stations
Overnight Lodging
Road Trip Vacation

America also witnessed the death of:

Many Small Towns
Mass Transit in Some Areas
Certain Aspects of Community                                       
Certain Types of Industry

Classic Corvette - My Favorite Classic Car
Maybe one day!

Over time, real estate has evolved to accommodate the needs of a much more mobile culture.  Whether we can or want to stem the tide of the automobile culture in America is an interesting question.  Automobiles in America are not only a sense of pride but also provide a great sense of freedom, both real and perceived.  People are able to go where they want when they want.  Changing this mindset, especially where there has been a historical absence of mass transit will be difficult.  Of course, the cost of fuel will always be a factor, but electric cars and natural gas powered cars over mass transit options may provide the alternative that Americans embrace.  The other alternative is that gas prices will not rise as much as people anticipate and the status quo will continue.  Regardless of what the future holds, the enduring automobile culture that has become a pervasive part of the American fabric.  It is woven into every aspect of American life. 

Other topics and trends we discussed in class were:

Technology's Impact on Real Estate - if it has not already, technology will ultimately eclipse the automobile in terms of its overall impact on real estate
Mass Transit Options Such As High Speed Rail - it would be awesome to have the US states linked together through a network of high speed rail lines - European and Asian countries are the leaders in high speed rail
Unique Commercial Properties - looked at the very strange underground commercial property called Subtropolis - someone should make a movie with this as its setting

Nissan Leaf - 100% Electric

There are many cultural factors that influence real estate and vice-versa.  It will be interesting to see if America's fascination for and love affair with cars, one aspect of our culture, can coexist with America's need to move in a more sustainable direction which could include a world with electric and hybrid cars, toll roads, TODs, urban revitalization, light rail, or even high speed rail. Pros and cons will accompany any changes that take place in the US, and the real estate industry, although somewhat slow to respond to change, will seek to accommodate the demands of current and future consumers.