Each era brings an evolution in living habits, and there are three very important shifts happening now in the housing market, partially driven by Millennials and Gen Z. Some recent studies and reports point to several fascinating trends in home ownership, living arrangements and mobility, all of which are having a profound effect on the companies that make home furnishings products, including lighting and home décor.
The Corporate American Home
There were always factory towns, where the big employer used to own much of the housing stock and rent to employees. But now, we’re seeing a very different spin on wide-scale ownership of private homes by big corporations.
Coming off of the Great Recession when housing prices tanked and regular people couldn’t get mortgages, investor groups have been buying up single family homes at staggering rates, creating a very different housing dynamic in America.
Last year investors bought one in five starter homes in the country, according to new research from CoreLogic, higher than in the first few years after the Great Recession and double the rate of two decades ago. In some markets, the percentage is even higher, up to close to half.
Some are buying them as quick flips, others as long-term investments and others as short-term rentals. But put together, it means much of the housing stock in this country is not available to the traditional homebuyer and these investor groups are gaming the system, raising prices and controlling availability.
For companies used to selling home furnishings products to new homeowners, it’s a very different dynamic and another reason why sales of these products may no longer be as in sync with housing market trends as they once were.
Co-Living is the WeWork of Residential
If it’s popular in the workplace, why shouldn’t the same concept work in living arrangements? That’s what a number of online/app-based services are saying as they promote the concept of “co-living.”
It’s similar to the age-old tradition of living with roommates, but with one key exception: You live with people you don’t necessarily know. You have common areas you share, but you also have your own space, though sometimes it may just be a bed.
A whole new business of arranging co-living has emerged, with major players including Common, Ollie Quarters, Startcity, X Social Communities and WeLive (yes, it’s part of WeWork) all getting in on the action.
According to a study by real estate company Cushman & Wakefield, the market for co-living is going to triple in the next few years from the current 3,000 beds to as many as 10,000. The jump is a result of limited housing choices, the rising cost of those choices and, perhaps most interestingly, the younger generation’s need to be with other people in an increasingly digital world, observers say.
And while the cost to an individual is usually less than other living arrangements, these co-living spaces are by no means low-rent, often including upscale amenities like gourmet kitchens, pools and hi-tech networks.
For companies that sell home furnishings, co-living apartments mean the purchaser for these products is not the occupant, but a third-party digital company, which presents a very different buying process.
Moving Rates Are Way Down
As a country that practically defined the word “mobility,” Americans have always been on the move. In 1985, nearly one in five people in the country had changed their residences within the preceding 12 months.
But that’s changed dramatically. Last year, fewer than 10 percent of the population had moved in the previous 12 months, the lowest rate since the Census Bureau started tracking this in 1948.
The trend impacts nearly every demographic group, regardless of age, gender, income level, marital status and, perhaps most importantly, home ownership level.
The reasons are many, according to recent studies. Some attribute it to the Great Recession, which caused people to be stuck where they were when it started; others say people are more attached to their communities and less likely to uproot themselves and their families. There is also the cost of moving, the fact that many jobs can now be done remotely negating a key reason for a move and the difficulties in securing new housing.
All in all, it points to an opportunity to go after the remodeling and redecorating market more so than the new housing segment for home furnishings companies.