Lately we have been seeing consumer interest in smaller properties across many different markets and many age groups in real estate. Smaller properties may include city condos, senior housing, small cluster homes and a few other markets that investors might be interested in exploiting.
All of these markets are an obvious reaction to the very large suburban mansions that were fashionable years ago. These types of housing are expensive to build and maintain and they are also too far from jobs and city centers to work for many consumers.
Another part of the realities that are influencing this trend is that more people are single. Actually there are more single person households than there are married couple households in the US today for the first time.
Smaller households mean people need fewer square feet to be and feel comfortable. Additionally single person households have less income and only one income, dictating a smaller capability to qualify for a mortgage.
Some couples may marry, but elect not to have children. Single people who are divorced likely have fewer children, reinforcing the need for smaller housing. Older couples and empty nesters need less room and more accessibility. Older parents may want a small, accessible open floorplan near children but not in the same house.
Most buyers across all of these markets want to be in buildings and developments near certain things.
Young people want to be in a neighborhood near lots of places to work and play. They like restaurants, night life and public transportation. They don’t cook much but they like storage for clothing and a nice master bath.
A lot of young couples want to have a home with a luxurious feel but no room for the kids they don’t plan to have. Some older couples may have some of the same wishes. This is especially true when we realize how many people wait to marry until they are nearly past child bearing age.
Then there are older couples, perhaps retired who are interested in living in a resort like environment with toys like pools, boats and other amenities, but not in a big house. They don’t want relatives or other company too often.
Another group of older people have specific medical needs for accessibility, nursing care, doctors and hospitals near, and availability of other services like shopping and transportation. All of these needs may come with an assisted living label or just some services nearby an apartment or condo.
Many variations of these things might be an investment opportunity designed and dictated by the size and location of a property that an investor can purchase and develop to suit the needs of a specific market. The biggest issue for many prospective investors is getting a commercial loan. SBA loans are a good alternative to bank loans and commercial bridge loans are a good alternative to SBA loans. Where investors go will depend on the property, their credit and the cash they have to invest.
Because each unit is smaller more can be squeezed into a smaller piece of real estate. Properties can be as small as 3 or 400 square feet if they are in a good downtown location that appeals to singles or couples.
These types of housing may become more the norm than single family housing. Is it the wave of the future? We will see.