The new-home market mirrors both general economic growth and shifting demographics.

Why does Central Florida’s homebuilding community appear to be on fire? And, what must it do to effectively meet this growing demand?

To the first question, there are some fairly straightforward answers: Start with a record 59 million people who visited the Orlando area last year (as reported in the International Business Times in April).

Add a $2 billion investment in cluster life-sciences companies, seemingly sprung from the ground overnight and located next to one of the most popular airports in the nation. Known as Medical City, it is home to hospitals, a medical school and other university facilities, research institutions and life-science companies. Across the next 10 years, Medical City is expected to create 30,000 jobs and generate a $7.6 billion economic impact.

Now, factor in a renaissance of downtown Orlando – $4.7 billion worth of reported activity. Some of the more high-profile projects in the works include Creative Village, Dr. Phillips Center for the Performing Arts, Citrus Bowl renovations and a Major League Soccer stadium, all to complement the Amway Center, which opened in 2010.

Other ingredients in this mix include the Orange County Convention Center (the nation’s second largest); the University of Central Florida, the state’s biggest (and the nation’s second-largest) university in enrollment; and near UCF, the world’s largest simulation cluster is located at the nation’s fourth-largest research park. On the transportation front, there’s $3 billion in passenger rail projects, including Orlando’s SunRail, Maglev and All Aboard Florida, and a planned $1 billion expansion at Orlando International Airport.

Orlando is changing. It’s becoming a sophisticated metropolitan city, no longer perceived primarily as a destination for major theme parks and attractions. It seems everywhere you turn, people are preparing for growth. With this tremendous growth comes the need for new housing, and as a result, $5 billion in real estate transactions were recorded last year alone.
Like most areas across the country, new homebuilding stagnated when the housing bubble burst in 2007 and it took more than five years for developers to venture – cautiously at first – back into the market. Today, inventory has yet to catch up with demand. Housing experts say it takes a minimum of two or three years to catch up with pre-existing demand, much less the expanded demand created by accelerated growth.

Growing economies drive the demand for housing. In turn, the strengthening of the housing market helps produce more robust economic growth. According to the Pew Charitable Trusts, Florida is fifth nationwide in job growth for 2014. The Florida Department of Economic Opportunity recently released its Local Area Unemployment Statistics, indicating Orlando has added nearly 50,000 jobs since June 2013.

So the cycle continues between housing and the economy, each supporting and boosting the other.

Research conducted by Charles Wayne Consulting Inc. shows the housing recovery in Central Florida began in 2012 but really surged last year when new-home prices increased 16 percent – an indicator that people have regained enough equity in their existing homes to consider moving again. Between these people and new home buyers in the market, many new developments are being launched. As of April 2014, 38 new projects were open that weren’t building or selling just three months earlier.
Which brings us back to the second question: What sort of homes should the industry build to best meet this demand?

Predicting future growth is not an exact science, but for some answers, builders should examine Florida and the nation’s changing demographics, which includes a focus on multigenerational housing. Martin & Associates, which consults in eight states including Florida, closely examined U.S. Census statistics and studies by Harvard University, Coldwell Banker, Pew Research Center and more to identify market trends.

Martin’s analyses reveal the next wave of home buyers nationwide is not the same group traditionally targeted by the industry. Families with children are a declining segment of the market. Our population is aging. This group, primarily ages 55 to 74, will account for 10.2 million people in the U.S. by 2020.

Many will be married couples without children and single home buyers. Martin’s research reveals that within the next six years those two groups will account for nearly 60 percent of new-home customers nationally, while married couples with children will fall to about 20 percent. As a traditional “retirement state,” that gap could be even larger in Florida (Real Estate Economics Webinar #12 Ð Martin & Associates, 2014: “Ride the Demographic Wave of the Future, 2015-2020”).

A cultural shift to multigenerational living is occurring. The 2010 census found that 63 percent of widows lived alone and 33 percent of 18- to 34-year-olds lived with their parents, also known as the boomerang kids.

Americans are coming to the realization that dispersed living isn’t always the healthiest option physically or emotionally. Research in 2008 found consumers were increasingly considering a multigenerational lifestyle, a reflection of an earlier time when grandparents, parents and children lived under the same roof.

Our change in consumer lifestyle, extended life expectancy, attitude regarding the value of family, financial factors and health care costs are some of the primary drivers.

While Americans rediscover the benefits of extended family living, multigenerational housing has been the norm in Central and South America and also Asia. Central Florida’s strong economy and technology-driven opportunities attract large numbers of families around the world. The Center for Immigration Studies reported that Orlando’s Asian and Hispanic populations were growing five to six times faster than the general population.

Based on the numbers and projections, there appears to be strong potential in the region’s multigenerational housing market – and something builders will pursue.

Strong economy. Professional opportunities. Soaring new home market. This is the equation for ongoing success and growth.

As builders and developers, we just need to follow the trends and deliver what fits the region’s emerging new demographics.

EDITOR’S NOTE: ANDRE VIDRINE, P.E., IS VICE PRESIDENT OF THE CENTRAL FLORIDA DIVISION OF TOLL BROTHERS, WHICH WAS RECENTLY NAMED NATIONAL BUILDER OF THE YEAR BY BUILDER MAGAZINE AND WAS TWICE NAMED NATIONAL BUILDER OF THE YEAR BY PROFESSIONAL BUILDER MAGAZINE [tollbrothers.com].