Around the world, homebuilders are reading up-to-date tea leaves in the mist, trying to figure out how to survive (and even prosper) an economic disaster. And we mourn the falls, working to keep our loved ones healthy and safe.
COVID-19 has drawn a political dividing line in much of the world. It reminds me of something that an American revolutionary, Samuel Johnson, said in 1775, “Patriotism is the last resort of the shooter.” In my story, the shooter is this virus – COVID-19.
Homebuilders build the physical environment for families, turning them into homes – homes we hope are filled with laughter, love, aspiration and celebration. Good housing is the cornerstone of strong communities.
Much of how COVID-19 affects us will be determined by science, but not all. “The question of how the pandemic plays out is at least 50% social and political,” said Sarah Cobey, an epidemiologist and evolutionary biologist at the University of Chicago. Scientific American.
Just as the Spanish flu gave us the vanity space, which emerged as a washbasin directly in the entrance of the front door of a house, COVID-19 will influence innovation in home design.
Open-plan, ever-larger homes have ruled the market for decades, even though family-sized shrinkage and real middle-class incomes have remained flat. American households had an average of 2.44 children in 1965, but 1.9 until 2015. With 128.6 million households, that is 7 million fewer children. Nevertheless, the average size of American homes grew 62% from 1973-2015, from 1,660 square feet to 2,687. House size still grew in 2018. In Canada, homes also grew as families shrank. In Europe, the average house size has grown to 1,880 square feet (which some Europeans would say is confusing).
Pandemic thinking is likely to favor less open spaces (though people will want to move to nature-positive spaces), perhaps refurbishing cozy dice to complement living rooms. Ascent can shift into less obvious improvements in safety and comfort. Better interior insulation will allow for quieter places. Shelter in porches and outdoor areas, and new approaches to landscaping will help keep mosquitoes and other disease-prone critters at bay. A bedroom, kitchen, living area and bath that is slightly removed from the core of the house will now accommodate adult children and elderly parents later (at Lennar, we call this the Next Gen Home). Split HVAC systems can prevent sick room air from being pumped into each room. Such mini-HVAC systems with no channel work have become very affordable.
Home-based jobs call for better home offices (Lennar calls this the Next Gen Home Office). The infamous toilet played in the background of U.S. Supreme Court over-the-phone verbal arguments underscores the dangers of unusual spaces for homework. So do videos of children and pets interrupting conference calls or other tasks. A larger home workgroup will push designers to balance job requirements with the privacy and security of the family.
However, pandemic-inspired housing innovation will clash with three critical forces that were already pre-COVID and are now on a high seed.
- Techno accelerations. The pandemic has accelerated the rapid integration of real and virtual activities, including remote work, remote health, and remote training. But electrical and automated compatibility for cars, delivery-enable systems, frictionless purchasing and the Internet of Things (IoT) enabling remote maintenance and repair of homes. . . all require fast bandwidth – faster, even then 5G. It also requires security: in a geopolitical environment where areas of surface attacks have expanded, we all want military-class cybersecurity.
- Climate. When China began to fall publicly in mid-January 2020 with the deaths of COVID-19, the World Global Forum’s Global Risk Report ‘was released. It warned that climate change would make the planet more hospitable to infected pathogens. Resilience is therefore the watchword of the rest of the century. Energy and flood capability, and smart insurance and other financing products that will encourage tremendous migration off the coast. . . these are the characteristics of the new urban morphology caused by climate change.
- Social justice. While COVID-19 does not cause the social justice movement that is affecting many parts of the world this summer and the US in particular, it does exacerbate the economic burden that in turn exacerbates the causes of the movement. : income inequality is central to this dynamic. The Institute for Policy Studies found that the 400 richest people in America are worth $ US3 trillion, more than all African-American households plus 25% of Spanish households combined. There is little doubt that these figures are incorrect now. COVID-19 has removed the ready resources of many families and this will provoke worldwide political reaction to varying degrees. Populist housing policies that threaten capital investment may limit house building and contribute to future housing crises. Including housing programs that create wealth among traditionally excluded populations, enable funding, innovate in housing use and urgently work on housing security for vulnerable populations will support how governments redistribute costly housing-related subsidies.
The ghosts of the 2008 financial crisis hang over the pandemic economy. But the 2008 crisis was ignited by housing. High-risk mortgages drove up the prices of homes that buyers could not afford but still bought. This text block for housing was buoyed by an irrational belief that prices would continue to rise. Low interest rates and inflated housing values lead to millions in refinancing when, in the US, household loans are extracted to pay for renovations, cars, boats, campers, and bucket list quests. The apartment block jumped and its bad ink sown through world economic systems.
A January 6, 2020 Washington Post article opened with: “A strong labor market and low mortgage rates should sustain the housing market by 2020. The problem will be to find enough homes for buyers. With unemployment hanging on to a 50-year low and interest rates well below historic standards, is the real estate industry is being dragged down by a shortage of housing…. “
Within three months, U.S. unemployment had risen to historic levels (more than 23 million Americans were officially unemployed at the beginning of May, more than 30 million at the end) but that Washington Post article still valid today. Low mortgage costs in the US and the developed world continue to drive with affordability. And the shortage in home production inherited from the 2008 crisis still limits supply, while at the same time millennials around the world are starting their families.
Sales of existing homes – typically about 90% of the U.S. market – are projected this year. New homes are favored over resale, and de-urbanization is taking place where it can. If new home sales continue in late spring and, as reported in the media, the early summer, then 2020 could be a fair year for new home builders. There has been a big jump in online home sales outlets, a worldwide spike in online home search activities, and purchases often happen without buyers even running through a home. A new, fully guaranteed home, bought without having to spend time with realtors and owners, has great appeal.
In the last century, vaccines and the movement of public health largely eliminated the most contagious infectious disease in much of the world. Industrialized countries have periodic outbreaks that remind us of this danger, including the HIV / AIDS, SARS, Zika, and West Nile viruses. Public health professionals tell us that we can enter an era in which mass urbanization, climate change, stressed natural ecosystems and other factors will result in a pandemic (or so approximately) every 7-10 years. This will force a calculation with what it means to work together towards a better future. But we will also realize that we will all seek refuge in a home. Maybe knowing that this will be our true last resort.
Reprinted with permission from the World Economic Forum. Read the original article.
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