In the midst of a forum on the state of the construction and real estate industry a group of us were treated to a 'state of the economy' luncheon. During the conflicting views of optimism and pessimism the good news is most felt we were through the roughest quarters and the bottom was almost over. Stabilized was the key word used. However for the construction industry it usually takes a few quarters and the rebound will hopefully be jump started by a reinvestment in housing stock, with a focus on affordability and sustainability. There was a small fact in the presentation that seem to go unquestioned. The issue of the post college re-nesters.
Two Generations - One Problem
The drop in the US housing market is being partly compounded by a tri-effect created by the baby boomers and the echo boomers, those born between 1989 and 1993.
1. The millions of graduating echo boomers who enter the workforce annually are, like many Americans, finding it extremely difficult to find employment. Instead of going solo, getting apartments or committing to first homes, they are returning back to their parents and taking refuge.
2. At the same time their new boomer landlords are not retiring because of recently depleted retirement funds, the drop in equity in their home and battered stocks. Coupled with a recession where many eliminated jobs will not return there was talk of 10-11% unemployment before we reach the light at the end of this economic tunnel.
3. Currently and for the foreseeable future we are not building or retrofitting the typical number of affordable entry level rentals. When the economy strengthens (lets say 2011) we may face a huge shortage, triggering a spike in rental prices.
Could these two generations could end up stifling US recovery? Is this the ultimate catch 22 or just a red herring?
The Green Retrofit Army
Taking a 40,000 ft. view for a second, perhaps it is the later. The fear driven stagnation of the housing market seems light years away from China who are building the equivalent of 31 Manhattans this year. (noted by Andrew Winston at todays' Sustainable brands conference). China is pumping $58 Billion (10% of its stimulus) into low-income and affordable housing. China sees the re-prioritization of its housing stock in partnership with pushing a green/sustainable agenda as key to recovery. Perhaps we should follow suit and instead of lamenting this echo boomer return, engage this army of passionate socially minded individuals in the retrofitting of their home towns and cities. In exchange for rent they could green their parents' homes. A lead that has already taken place in places like Babylon, NY and Toronto, Canada.
image: Long Island Green Homes
Retool government involvement
Now we've empowered a new generation of home builders, let's go one step further. Let's announce that the federal government will not build one new affordable house in 2009 and instead let's retool the system.
1. Use all building funds set aside to retrofit foreclosed properties with green materials and technologies. Match with green funds and utilize groups like Habitat for Humanity and Rebuilding Together.
2. Create a more efficient mechanism of getting low-income families into existing vacant properties
3. Engage in public/private partnerships that invest in R&D for compact first starter homes - with a focus on US focused job creation and reusing the idle GM plants for regional pre-fab solutions.
If you have any other ideas -- post below.