The Right Place

Thimble sweet thimble; Futurist sees pint-sized, half-priced houses for Chicago By Sally Duros When Glen Hiemstra, founder of Futurist.com, looks 50 years into the future he sees inexpensive small houses.

Hiemstra spoke about the future of housing at the annual meeting of
the Homebuilders Association of Greater Chicago. His charge was to
shake up the paradigm for Chicago's homebuilders and that he did.

"So who is going to build a product that costs half as much to
build and is half the size of the product that's being built
today," asked Hiemstra. "We won't need 200,000 of these houses,
we'll need 20 million of them in the next 20 years."

"Chicago is one of the two great cities in America: it's between New York and Chicago," he says. "It is just a beautiful, wonderful urban environment." But he says, "Chicago has fallen prey to the desire to build cheaper housing by essentially believing that people should drive until they qualify.

"So now you've got this great exurban area that is too dependent on
automobiles and too spread out.

"The next 50 years are all about turning all the exurban areas into
mini-urban areas," says Hiemstra, who is from Seattle, and also the
author of Turning the Future into Revenue.

To do this and to do this profitably, Chicago builders need to know
who will be buying the houses of the future and what they will
want.

Midwest demographics bring two major focuses to the homebuilding
industry. First, the population of young people that came after Gen
X, those born in the 80s, who Hiemstra calls the digital natives.

"We have to ask 'What kind of home will the digital natives want?'
" Hiemstra says. "They are much more urban oriented. Much more
digitally connected. Everything that they do begins on a wireless
device or on the Internet." That includes and especially includes
buying a house, learning and researching.

"The Digital Natives will say, 'I will never live in a suburban
3,000-square-foot house with a quarter or half-acre of grounds, and
have to take care of that lawn.' "

Instead, Hiemstra says, they'll say: "I want to live in the center
of the village, or town or city. I'm happy with 800 to 1,000 square
feet. Part of that is they are in their 20s, and it could change
later."

Numerically, the digital native group at 80 million is as big as
the baby boom's 76 million, but they are a smaller percentage
because today's population is 300 million vs. the 200 million
during the 1967 boomer peak.

The digital natives combined with the aging of the baby boom is a
double whammy, double impact demographic.

Today, the leading age of the boom is 61, Hiemstra says. "Most
Midwestern boomers will stay here in the next 20 years," says
Hiemstra, who himself looks to be a 50-is-the-new-40 boomer. "That
means we will go from 55 million over the age of 65 to more than
100 million people over the age of 65."

In the Chicago area, "the choices boomers have for housing is the
suburban house, with 3 extra bedrooms and a half acre. Or they can
buy a half-a-million to a million-dollar condo in a high-rise in
downtown Chicago," Hiemstra says.

"Here's where I see builders are not seeing the picture," Hiemstra
says. "Baby boomers and digital natives say they don't want to live
in a house that big." Affordability is a big issue, too. Although
today large, expensive houses are marketable. In the future they
might not be.

Oddly, that's exactly what futurists said 20 years ago. And look
where we are today.

Thirty years ago, the average size of a family was four, living in
a 2,400-square foot house. Today the family is two, living in a
3,500 to 4,500 square foot house.

"In this energy environment the big house makes no sense," Hiemstra
says.

Why were futurists wrong 20 years ago? Hiemstra didn't hazard a
guess, but I have one.

They didn't foresee that real estate's "exchange" value would swell
as new software and investment vehicles pushed houses into a realm
of "Supersize me!" luxury. Instead, futurists might have been
calculating forward based on that old-fashioned, sentimental "use"
value that sees a house primarily as a home. They also might have
assumed a fundamental value of thriftiness characteristic of
Depression-era home purchasers.

For Hiemstra's vision to come true we'd need to see a cultural
switchback to those old-fashioned values of house as home and piggy
bank. It would have to be in fact and purchasing power, not just in
image.

Hiemstra said that Chicago's builders didn't push back much against
his speech. "Mostly what I got afterward were people who said,
'Policy and zoning regulations are the major impediment to building
the kind of housing we want,' " he said.

But Al Darwan, president of Buckingham Builders Corp. and president
of the HAGC, told me that Chicago's homebuilders are always
anticipating future trends. "Things could change," Darwan told me,
"We are not doing mobile homes, but eventually we may."

Midwest demographics bring two major focuses to the homebuilding
industry. First, the population of young people that came after Gen
X, those born in the 80s, who Hiemstra calls the digital natives.

"We have to ask 'What kind of home will the digital natives want?'
" Hiemstra says. "They are much more urban oriented. Much more
digitally connected. Everything that they do begins on a wireless
device or on the Internet." That includes and especially includes
buying a house, learning and researching.

"The Digital Natives will say, 'I will never live in a suburban
3,000-square-foot house with a quarter or half-acre of grounds, and
have to take care of that lawn.' "

Instead, Hiemstra says, they'll say: "I want to live in the center
of the village, or town or city. I'm happy with 800 to 1,000 square
feet. Part of that is they are in their 20s, and it could change
later."

Numerically, the digital native group at 80 million is as big as
the baby boom's 76 million, but they are a smaller percentage
because today's population is 300 million vs. the 200 million
during the 1967 boomer peak.

The digital natives combined with the aging of the baby boom is a
double whammy, double impact demographic.

Today, the leading age of the boom is 61, Hiemstra says. "Most
Midwestern boomers will stay here in the next 20 years," says
Hiemstra, who himself looks to be a 50-is-the-new-40 boomer. "That
means we will go from 55 million over the age of 65 to more than
100 million people over the age of 65."

In the Chicago area, "the choices boomers have for housing is the
suburban house, with 3 extra bedrooms and a half acre. Or they can
buy a half-a-million to a million-dollar condo in a high-rise in
downtown Chicago," Hiemstra says.

"Here's where I see builders are not seeing the picture," Hiemstra
says. "Baby boomers and digital natives say they don't want to live
in a house that big." Affordability is a big issue, too. Although
today large, expensive houses are marketable. In the future they
might not be.

Oddly, that's exactly what futurists said 20 years ago. And look
where we are today.

Thirty years ago, the average size of a family was four, living in
a 2,400-square foot house. Today the family is two, living in a
3,500 to 4,500 square foot house.

"In this energy environment the big house makes no sense," Hiemstra
says.

Why were futurists wrong 20 years ago? Hiemstra didn't hazard a
guess, but I have one.

They didn't foresee that real estate's "exchange" value would swell
as new software and investment vehicles pushed houses into a realm
of "Supersize me!" luxury. Instead, futurists might have been
calculating forward based on that old-fashioned, sentimental "use"
value that sees a house primarily as a home. They also might have
assumed a fundamental value of thriftiness characteristic of
Depression-era home purchasers.

For Hiemstra's vision to come true we'd need to see a cultural
switchback to those old-fashioned values of house as home and piggy
bank. It would have to be in fact and purchasing power, not just in
image.

Hiemstra said that Chicago's builders didn't push back much against
his speech. "Mostly what I got afterward were people who said,
'Policy and zoning regulations are the major impediment to building
the kind of housing we want,' " he said.

But Al Darwan, president of Buckingham Builders Corp. and president
of the HAGC, told me that Chicago's homebuilders are always
anticipating future trends. "Things could change," Darwan told me,
"We are not doing mobile homes, but eventually we may."

e-mail: sduros@ suntimes.com

Technorati: