More investors and lenders are predicting an increase in single-family housing development that will outpace multifamily buildings, according to the 2017 Akerman U.S. Real Estate Sector Report.
Of those surveyed, 43 percent said single-family homebuilding will be the most active sector in real estate development, followed by multifamily housing at 37 percent. This is not only because of increase demand for single-family housing, but because of an increased demand for single-family rentals. The report found that institutional investors were 2.9 percent of the total homes sold in the first half of 2016, compared to 2.6 percent for the same period in 2015. Additionally, around one in four single-family homes were non-owner operated and were instead rented out.
Approximately 26 percent of those surveyed say the preference will have the strongest affect on real estate development in the next three years, second only to aging demographics. This is because Millennials are said to be living in major cities because they value a “live/work/play ethos” and Baby Boomers are leaving suburban homes to simplify living arrangements.
However, the report concludes that survey respondents are more likely referring to more urban-like communities near major cities, such as Old Town Pasadena outside of Los Angeles or Legacy Town Center in Plano, Texas outside of Dallas. These areas will have walkable, compact development near public transit with retail, dining and multifamily residences all-in-one.
“A number of national, regional, and local developers are still very much focused on building communities outside the urban core, which provide the same level of comfort and attractions of city centers,” Cecelia Bonifay, chair of Akerman’s Land Use & Sustainable Development Practice, said in the report. “The reinvention of suburbia has paved the way to a wave of construction across the country.”
There is also an increase in more creative residential communities, such as “agrihoods” which are sustainable farm-to-table centers with community gardens. Agriculture and food-based amenities are a growing trend among new developments, according to the Urban Land Institute, and more than 200 “agrihoods” exist or are being developed through the United States. In lieu of golf courses, developers are building communities around sustainable energy and food.
According to the report, the development of “agrihoods” and mixed-space communities will encourage homebuyers to look to the suburbs. Buyers will look for places that offer convenient, car-free shopping, employment, entertainment and recreational activities. And, the report says, these re-designed suburbs may be key to the next wave of economic growth.