Changing living patterns in America

On his Freakonomics blog, Stephen Dubner cited an interesting and thought-provoking statistic (well, more a projection than a statistic, but so be it) about the housing market from this CNN.com article.

The National Association of Homebuilders predicts that by 2015, 60% of new homes will be designed with "dual master bedrooms."

The CNN article brings up the statistic--and Dubner analyzes it--in the context of "mediocre marriages", indicating that the predicted growth in dual master setups is a response to increasingly loveless marriages and couples who don't want to share a bed. I think that may have something to do with it, but there certainly aren't enough mediocre marriages out there to justify that many new dual master homes (are there?).

More likely, the NAHB projection is reflective of a changing mindset and economic reality among those in the upcoming generations. For one, the housing crash that precipitated the financial crisis of 2007-2008 has eroded a long-standing belief that housing is a stable investment and that home ownership is a laudable goal for all Americans. An increasing number of younger people (including well-regarded journalist and hedge fund manager James Altucher) have begun to question the wisdom of owning real estate at all, and have turned to renting instead. A dual master setup would seem to lend itself particularly well to a renting situation, where two people could share the rent on a house without having to share a bathroom or a primary living space.

Furthermore, economic realities affecting two important groups of people may force a trend toward co-habitation over the coming years. The first of these groups is the elderly--while they likely don't have to worry about suspensions of Social Security payments any time soon, it is clear that the Federal Reserve's low-interest rate policy has made life very difficult for "savers", those who rely on interest payments to generate income. Many of the elderly are of course in this category, and without a steady stream of income, they may be forced to move in with their children, as was commonplace in previous generations.

The second such group is on the other end of the spectrum, but no less impacted by the economic recession. With an ever-increasing number of college graduates unable to find adequate employment upon graduation--and many others accepting much lower-paying jobs out of necessity--young professionals may be forced to move back in with their parents on a semi-permanent basis as they try to whittle away at their mountains of student loan debt. This dynamic has of course already begun, and homebuilders may just be trying to get ahead of the curve.

Ultimately, I think that the housing-led recession of the early 2000s will have a long-lasting effect on the way that Americans view housing and homeownership. I've already written here before about how I think the culture of homeownership is limiting economic flexibility, and this dynamic seems bound to reverse itself.

After the Great Depression, a generation of workers shunned banks, unwilling to place their deposits with them or take loans out from them. I think it's possible--if not likely--that the next generation will have a similar response with respect to homeownership, shunning the traditional American dream in favor of a more mobile (renter's) lifestyle. This, combined with the economic factors that I discussed above, will have a dramatic impact on how homebuilders and real estate agents approach their jobs.

If not, then there's gonna have to be a lot more mediocre marriages to fill all those second master bedrooms...

[Freakonomics]