The Big Little Book Of Nexts: Real Estate Trendspotting for 2012

As we continue to redefine the very notion of “value” in this uncertain economy, and with protesters angry at just about everything, it’s hard to think of a single segment of business more affected by talk p triple dip272 than real estate. How we work, live and define home will continue to shift in 2012, with many trends on the horizon that will change real estate. One trend we’ve been tracking for a while is the notion of renters envy, but don’t think that a monthly lease is necessarily the way to go. True, the renters market in cities such as New York is exploding, but Moody’s Analytic Data shows it makes more sense to buy again, as the ratio of house prices to yearly rents is almost back to its pre-bubble average. Houses are also more affordable now273 than they’ve been in the last 40 years, thanks to ultralow mortgage rates. (Needless to say, though, the rent cycle will continue for quite some time as many in the workforce who have been laid off are stuck with a mortgage they can’t afford and often turn to renters to help pay their mortgage when they have to move to another city in search of a job.) Real estate will get gray this year as more and more boomers transform the very notion of home in 2012. The senior population is growing rapidly, but demand for senior housing exceeds the capital needed to build such units. Moreover, many boomers would rather move in with their families to not only save money but also be around the ones they love and stay away from old-age homes that make them feel, well, old. And because today’s boomers are healthier and more fit and young at heart than seniors of the past, perhaps retirement (and 55-plus) communities need some rebranding. Homes near hospitals and medical offices will be popular, especially if integrated into mixed-use neighborhoods with shops, restaurants and services. A recent Coldwell Banker survey274 said 80 percent of its agents have noticed older boomers looking to trade down for a smaller home, not to save costs but to live a simpler life. On the flip side, 31 percent of younger boomers, aged 47 to 55, would like more space, to accommodate children not yet ready to leave the nest. And speaking of empty nests, Gen Y is changing the game when it comes to real estate. With few job prospects and mounting student loans, more and more millennials will move back in with mom and dad, and multigenerational households will take hold, according to a new report275 from the Urban Land Institute. The report goes on to talk about how millennials will prefer living in smaller homes that are close to work; they’re choosing an easier commute and better quality of life over big spaces. “Redefined spaces” will be another phrase to watch for, as technology and the ability to work from anywhere (thanks to cloud-based storage and the continued proliferation of smartphones) mean home and office will increasingly exist in one space and allow telecommuting to go 2.0. Builders will follow, looking for ways to satisfy renters and buyers with spaces that include a home office, or at least a retooled second or third bedroom. According to the Urban Land Institute,276 “Large multifamily residential properties may profit as much from adjacency to office supply stores as to supermarkets and cleaners.” But what about workspaces for those of us who still have to leave home to get to our job? Look for Gen Y to wield some influence there, too: Tech firms such as Google and Facebook are moving to urban locations to attract young talent who prefer an urban lifestyle and are giving their office design some cool makeovers. At Facebook’s Palo Alto, Calif., headquarters, employees can customize their own spaces by tagging the walls, rearranging furniture and adding artwork. The social media giant’s offices also include lots of spaces for collaboration and many shared spaces available—plus a DJ area. Look for offices overall to be less full as they transform277 into “meeting places more than work places.” When thinking of reconfigured spaces, what’s happening among the billionaire crowd in Mumbai is nothing short of fascinating: the rise (pun intended) of the skyscraper mansion, with India’s super-wealthy employing a nowhere-but-up aesthetic to monster homebuilding. The Singhania family, for instance, owners of the Raymond Group of textile and apparel companies, has constructed a 36-story house (with more to come, reportedly) that towers over the city. Often blanketed in secrecy, perhaps because of the neighborhoods filled with stark poverty below, homes of several other Mumbai tycoons are tall orders, too: Venugopal Dhoot, chairman of Videocon Industries, says The New York Times,278 is constructing a 12-story tower; Mukesh Ambani, chairman of Reliance Industries, also a textile producer, whose $27 billion fortune ranks him as one of the richest men in the world, has built a 27-story house279 that features nine elevators, a spa, a movie theater and three helipads. The Ambani family has not moved into the year-old tower yet— because its vastu shastra (a Hindu version of feng shui) is off, according to various reports.280 How’s that for a twist on the “empty nest”?