New Trends in Affordable Housing

During strong economic times, we always recommend practices take into account single-family detached housing increases. In other words, when you see lots of homes being built, it is usually an indication of strength within an area. The recent changes in the credit market are making this trend reverse itself FOR NOW.

Do not assume that large tracts of single-family homes are a thing of the past. We expect that within four years, this trend will hold true. We also expect that the “square footage” of homes to be steady but that the tract of land they are one will shrink significantly. But we are noticing a change in the “middle class, affordable housing market” that you should consider.

Young families are going to have a harder time getting into the housing market than ever before. Having been burned by foreclosures in the sub-prime market and being under closer scrutiny of regulators, the effect is a pendulum swing toward more middle-class apartment projects. Single people always have tended to live in apartments. But young families try to get into single-family homes as early as possible. That possibility of moving in may have to put off as larger down payments and higher credit scores are required to qualify. That does not mean that these young families are going to consider living in mom and dad’s basement.

Young families are going to be offered larger and nicer apartments for rent that will cater to middle class families with children. Rather than looking like the apartment complexes from their single-years, they will have common playgrounds and swimming pools that are supervised, study halls for children coming home before their parents, increased access to food delivery services (delivery is not just pizza anymore!), and more parking spaces per apartment.

Practices that are conveniently located near these rental apartment units will have a distinct advantage. This is especially true for orthodontists and pedodontists.

Where can these new locations be found? In our experience, we are seeing more and more of them grow up near city “beltways.” It is a serious trend that most cities are developing a beltway for easy access to the city center as well as far-flung, newly developing locations. The new suburbs (particularly those that are upscale) lied outside of these beltways, often within a 45-minute drive of the downtown. These apartment centers are usually closer in and seem to be associated with new regional shopping centers (such as the Lifestyle Centers we have described in previous articles). The trend seems strongest in the New South and Southwest (Atlanta, Jacksonville, South Beach, Dallas, Phoenix, Columbus, etc.) as well as the Central Valley in California, North Las Vegas, and many communities in Northern Utah.

But be warned, the housing market is fickle. These apartment complexes will likely not survive more than a single generation of middle class families before the single-family housing market picks up again. After that, who knows who will live in these apartments?