More than 100,000 people descended on Las Vegas to attend the 2019 Design & Construction Week, where the International Builders Show celebrated its 75th year of delivering a look at the latest technologies and trends in the building industry. From education sessions to interactive exhibits, industry leaders shared insights and innovations with builders from all over the world.
Didn’t make it out? Don’t worry, DTE Energy checked out some of the hottest sessions on the builder industry market and we have the scoop for you.
Market growth continues, but slows in 2019
During three days of jam-packed sessions, multiple economists had similar outlooks on what’s ahead in 2019 and 2020 for our economy and the building industry. Bottom line: while the national building market is slowing, growth will continue through 2019. The experts forecasted a strong spring buying season for new home construction, with an estimated 1 percent growth in 2019.
Some of the top factors impacting new construction market growth include a lack of skilled labor and rising material and land costs.
On the flip side, existing home sales are expected to flatten or decline, leaving a gap in inventory for the entry-level homes. This is because existing entry-level home owners are staying in their houses for approximately four years longer than historical averages.
These home owners have seen an average of $12,000 increase in their home equity due to the growth of home prices since the recession. While those families may want to move, they aren’t looking for huge square footage increases in a new home. Unfortunately, most newly constructed single family homes are on average 2,500 square feet. So, many of these homeowners are opting to invest their equity growth into remodeling instead of into a larger property.
This means availability of entry-level homes is limited for buyers looking to downsize or to exit the rental market to become first-time home owners. Who are these buyers? They are two of the largest generations in our nation: Boomers and Millennials.
Buyers young and old want smaller footprints, big lifestyles
As boomers (ages 55+) begin to make the shift into their second life as empty nesters and retirees, they want to create an affordable future with an entertaining lifestyle. Research shows 80 percent of boomers want function over size in their retirement home – they want to downsize. On average, they prefer a 1,500 to 1,800 square foot, open floor plan house with an outdoor living space for entertaining and in-home technologies that are highly efficient with low cost, predictable monthly expenses. And don’t forget the three-car garage – boomers are willing to pay an average of $10,000 more for this space that can double as a man cave! They also want these homes to exist in an age-targeted community with common areas, such as fitness centers and parks.
At the same time, with rental rates on the rise, the millennial generation (ages 23 – 38) is beginning to shift from the rental market to home ownership. What they are looking for is very aligned with boomer buyers: affordable, smaller footprint homes that allow them to live comfortable while enjoying an adventurous lifestyle. They also want the in-home technologies, entertainment spaces and the community vibe with common spaces to mingle with neighbors and convenient access to urban areas – think work hard, play hard.
Designing for the market
The reality is builders have little control over the labor challenges and material and land costs facing the industry. What they do have control over is the design of their homes. To meet the needs of the merging interests of boomers and millennials, builders must innovate approaches for designing affordable, entry-level single-family homes and communities that are both desirable for these generations and profitable for builders.
Visit the IBS website for all the top news and innovations coming out of this year’s show. For sustainable and green building support, the National Association of Home Builders has several resources available. Also, check out DTE’s ideal natural gas energy home and other energy efficiency tips for ideas on how to design affordable and efficient appliance and technologies into the home.
Story written by, Jennifer Wilt, program manager for gas sales and marketing, DTE Energy.