Three D’s now Four Posted By ewmiller on May 16, 2011
There have traditionally been three “d” words that have impacted the antiques industry (not to mention lawyers). They are death, debt and divorce. Now there’s another: downsizing.
One thing that, as can be expected, has a significant impact on the antiques market in particular is real estate. The reality there is, not only is the housing market in the tank, but we’re looking to live in less space, which naturally means with less stuff.
In October, 2010, economists at the National Association of Home Builders took a new look at census data and found that single-family homes in the U.S. continued to get smaller in 2009. From a peak of 2,268 square feet in 2006, the group says the median size of new single-family homes dropped consistently through last year, when the size was down to an even 2,100.
Moreover, the builders estimate the downsizing trend is likely to last longer. The current decline in home size can be attributed to factors like the desire to keep energy costs down, the amount of equity in existing homes available to be rolled over into new ones, tighter credit standards, less interest in buying a home as an investment and a growing presence of first-time buyers.
When asked about the trend toward smaller houses, one builder on an affordable housing feed replied that smaller is definitely how it’s going with average sizes in the 400 square foot range for studios and 500 sf for one bedrooms. That’s small!
In the longer-term, it’s not the current state of the housing market that’s of primary interest, rather the demographic trends that will impact the housing market, the size of homes and the larger need to furnish homes, or the need to dispose of existing furnishings.
One place to look is a 2010 publication by the Urban Land Institute, Housing America by John McIlwain.
At times it may not seem like it, but McIlwain says in the report that after the recession ends demand for housing will increase. Four demographic groups will drive housing markets for the next decade, each of which is large and facing a unique set of challenges.
First, older baby boomers will constitute a senior population unprecedented in size. Younger baby boomers will be unable to sell their current suburban homes to move to new jobs. Generation Y will be renting housing far longer than did past generations; and immigrants and their children will want to move to the suburbs but may find housing there too expensive even after the current drop in prices.
The population of the United States is projected to grow rapidly during the coming decade, still McIlwain says the homeownership rate, currently 67 percent, will fall to levels not seen in two decades. This will produce a strong market for rental housing in the years ahead.
It’s not clear how more rentals and less homeowners will impact the industry, but I’d guess it could benefit the lower end of the antiques market. It will also depend on how high the rents are. That assumes generation Y develops an interest in antiques. If you take a look at this recent graph on CNN, you can develop a picture of just who may be in the market for furniture and when.