Aug. 10, 2023
The housing crisis following the COVID-19 pandemic has cast several existing housing trends in a new light. Home prices and rent costs have skyrocketed, while rising inflation has pinched already tight housing markets.
Housing crisis trends post-pandemic
While housing costs were already on the rise before the pandemic, demand for new homes has since boomed in spite of limited inventory and high interest rates. This reduced housing mobility as led to more people coliving — either with family members or other roommates. While there are some signs of loosening in the rental market, many households are at imminent risk of eviction without any clear prospects for new housing. These five trends from the 2023 Trend Report for Planners explore the dynamics of the present housing crisis and how they could influence the housing choices available in the years to come.
1. Coliving becomes more common — even among older demographics
Homeowners are increasingly holding on to their properties while younger and more diverse populations are largely locked out of the market. For younger buyers, significant existing debts (in the form of student loans) and rapidly rising costs (due to both price inflation and the rise in interest rates) are making homeownership untenable in the short term. Even in areas embracing zoning reform, continued supply chain problems and inflationary price pressures are disincentivizing builders and developers from constructing new housing stock. This lack of available and accessible housing, even for buyers beginning to approach middle age (in 2022, the median age of first-time home buyers was 36 years old), may have serious repercussions for communities across the U.S.
While coliving has long been a trend in the rental housing arena, cohousing and homesharing are increasingly becoming options for many looking to purchase a house, but who lack the ability to finance it on their own. While often similar in structure to traditional subdivision developments, these types of communities feature novel ownership structures that improve affordability and access for people who may otherwise be unable to purchase a property on their own. The rise of coliving poses new implications for zoning and land use that planners should prepare for.
2. Multigenerational living requires new types of development
In the U.S., young adults today are much more likely to be living within a multigenerational household than 50 years ago. According to the Pew Research Center, 17 percent of adults aged 25 to 34 live in a parent's home and an additional eight percent live in another type of multigenerational living arrangement. A variety of social and economic pressures are driving this change, including student loan debt, rising housing and rental costs, increasing costs of goods and services, and the cost of elder care. These challenges offer opportunities for planners to support intergenerational approaches to community planning, including multigenerational housing.
Some communities are looking to accommodate multigenerational living through dedicated co-living housing developments. In the village of Oak Park, Illinois, a novel intergenerational cohousing development is currently under construction. The project, Oak Park Commons, seeks to intentionally attract residents of diverse ages, addressing the housing stressors for older residents looking to downsize from single family homes and thereby making room for young families. Residents will share responsibilities for maintaining common space and volunteer time and effort toward collective needs, including cleaning, cooking, and governance. Planners should be prepared for new iterations of intergenerational housing and multifamily developments, by learning new building typologies, planning new amenities, and recognizing the need for new services catering to mixed-age households.
As employers continue to struggle to attract office workers back to downtowns and other business districts, cities such as Washington, D.C., and New York are seriously considering the potential for commercial to residential conversions. Photo by Jeenah Moon/The New York Times.
3. Cities explore new interest in commercial-to-residential conversions
The option for remote work for many employees resulted in a devastating decrease in office space occupancy (from 95 percent to current rates of 47 percent), turning many downtown areas to ghost towns. As cities and employers continue to struggle to attract office workers to downtowns and other business districts, many communities are considering commercial-to-residential conversions.
Between 2020 and 2023, cities in the Washington, D.C., metropolitan area have converted more than 2,000 offices to housing units. In cities that are struggling to address the housing crisis and bring life back to their downtowns, this approach is extremely appealing. However, the cost of converting commercial and office developments into multifamily housing can approach or even exceed the cost of new construction. Improved conversion techniques, however, may make it more affordable. Cities will have to consider how office-to-residential conversions factor into their zoning reform efforts and how this trend could impact their city's post-pandemic trajectory. This might be the next opportunity to rethink the structure of our cities to make them vibrant, inclusive, and economically resilient.
4. As private corporations buy up affordable housing stock, accessibility withers
Large private corporations are playing an increasingly direct role in the purchase and management of affordable housing and rental stock, including single-family homes. The sheer volume of these purchases and holdings by multibillion-dollar private equity firms has an outsized impact on the overall dynamics of market rates and available stock.
In 2021 and 2022, the top private equity firms owned more than one million apartments in large, midsized, and small cities and communities across the nation. After purchasing homes, many firms seek to maximize their profits through cost-cutting, additional fees for rental agreements and payments, and aggressive evictions followed by major rent increases. If this trend continues to drive rent hikes and evictions, planners should be prepared to recognize this issue in their communities and implement necessary measures to make housing affordable and accessible.
5. A potential wave of evictions raises concerns about homelessness
With the expiration of federal pandemic stimulus support, the rolling back of eviction freeze policies, and rising costs due to inflation, there is a significant risk of a large-scale and widespread wave of evictions across the U.S. According to the U.S. Census Department, more than eight million Americans are not up to date on their rental payments, and roughly 20 percent of renters making less than $35,000 annually are behind on their payments.
Given recent increases in the cost of food and energy and historically tight housing and rental markets, homelessness may rise in tandem. However, recent declines in rental prices driven by declining demand and increasing multifamily rental stock could help to slow the rate of evictions. Planners should be aware of and prepared to act on rising eviction rates at the local level. In order to help keep residents housed, planners should also consider the role of more equitable zoning policies and nontraditional housing types in contributing to a more restricted and expensive housing market and how those restrictions can be loosened.
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