By Sara Huebener
We attended an interesting class recently that discussed patterns the state of Minnesota is experiencing in regards to demographics, and the implications these patterns will have for our local real estate market. It was fascinating to look at all the graphs and charts and how these trends have changed from the 1950's until today. While the class discussed mainly the changing demographics of our state and marketplace and some conclusions could be drawn, it will be interesting to see the extent to which our market will be impacted by these changes. Only time (as in a decade) will tell. To recap the entire class would require an entire newspaper, so here are just a few points.
One of the points that stands out in my mind is the growing change in the family structure from the typical married couple with children, to unmarried couples (or singles) with children. Obviously in the 1950's married couple households with children was commonplace, yet that trend is disappearing rapidly. The graph showed two lines, with one line representing married couples with children,and the other representing unmarried couples and/or singles with children, getting closer to crossing in the future, meaning that unmarried households with children will be the majority. This raises some questions about our current housing stock. Many traditional suburban homes are fairly spacious, with two stories and four or more bedrooms. The decline in the traditional family structure as we know it raises some curious thoughts about how, ten years from now, our suburban housing stock will meet the needs of the consumer once the number of unmarried/single parent family households becomes more commonplace.
It is no surprise that the baby boomers are a significant group to consider as well. The number of childless couples and/or single persons living alone is expected to grow significantly by 2015, mainly attributed to empty nesters, widows/widowers, and also single parents (primarily female heads of household). Minnesota projects that by 2015, the number of people living alone will exceed 88,000, and the number of married couples without kids (including empty nesters) will reach nearly 120,500, compared to a 24,500 decline in the number of traditional married households with children. The implications of these changes will create some interesting opportunities for our housing market.
It was also interesting to visualize the charts on how home prices affect mortgage delinquency rates. Between January 2004 and January 2006, home prices peaked. This peak directly corresponded with the drop in mortgage delinquency rates during the same time period. Many people used creative financing to get into homes and were already living very "tightly". Once home prices dropped, the option to sell as a means to solve a financial issue became problematic, because mortgages far exceeded values. Furthermore, some used their homes as an ATM of sorts, cashing out home equity to finance vacations, cars and other non-appreciating assets.
In summary, while far more was discussed than I can highlight here, the class illustrated some thought-provoking data that will produce some results that we 'll be monitoring as time goes on. Meanwhile, the West Savage area continues to be a great place to live and raise a family, and it is everyone's job to maintain the desirability of our community.
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