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American Housing Market

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    Analytical review.

    American housing market has been an issue of interest for researchers many years.  It is common truth that the term “American dream” refers to a dream house, but characteristics of the dream house for American public have been very different during different years. Consumers’ housing preferences change rapidly, and therefore require considerable research.

    Major theme and evidence supporting conclusions

    Dowell Mayers and Elizabeth Gearin conduct research of consumer housing preferences in their article “Current Preferences and Future Demand for Denser Residential Environments” and come to the conclusion that in future demand for denser neighborhoods is going to increase in future as the result of changes in the consumer segments. The authors support their conclusion by the fact that a large group of people- baby-boomers- is currently going to reach retirement, and their preferences are going to change radically in favor of high density and walkable neighborhoods. As more and more baby-boomers grow older, the demand for these neighborhoods starts increasing dramatically.

    The authors argue that in the near future baby-boomers, and not younger people, will be dominating the housing market, and their preferences will be determining the major trends in it.  In the article, large attention is devoted to the analysis of preferences which the segment of baby-boomers has at present and how these preferences are different from the past. According to the opinion of the researchers, as baby-boomers grow older, they become more interested in neighborhoods which provide more convenience to people living it. For example, older people do not want to commute large distances to malls, restaurants and other places where they often go. They no longer wish to live in the neighborhoods where cars determine people’s capabilities to reach different places. Instead, they want to live in the walking distance from major places of interest. Townhouses can be very preferable solutions in such a case, because they enable baby-boomers to live in the middle of the city and still possess a relatively large house. Older people are more concerned with the environment of the neighborhood they live in, and therefore they tend to prefer houses in walkable neighborhoods. They are less concerned with the availabilities of good schools in the area because their children have grown up already. Baby-boomers will no longer prefer low-density neighborhoods because they will want as many interesting places to be located close to them. They will no longer be against having various types of houses in their neighborhood, and will even welcome building of condominiums.

    The authors discuss other factors which could be contributing to the tendency towards growing interest of the public to higher-density walkable neighborhoods. As one of these reasons, they cite changes in the nation’s culture towards “coffee” culture, when consumers no longer want to live in large distances from the major city because they want to participate in the city’s busy life. The fact that the level of crime has been decreasing during the recent years is another reason of the change in the preferences of consumers. Cities are no longer considered as dangerous as they were in the past years, and more people are willing to live in them.

    The fact that a smaller percentage of households currently have children is also a very important factor. People living in households without children are not interested in neighborhoods in which there are good schools and large playgrounds for children. Instead, they are more concerned with opportunities for their own recreation, and such opportunities are obviously larger in densely populated areas. One more factor which the authors devote attention to is increasing traffic congestion. If in the past more people were willing to live in a larger house in the suburbs and commute for an hour to work, this tendency is currently becoming much weaker because the average time of commuting has increased radically due to heavier traffic.

    As other factors contributing to the interest of people towards denser communities, Mayers and Gearing cite immigration, positive examples created by growing diversification, and fashionable design of higher density for the middle-class. The authors mark that as the result of immigration, cities give shelter to people of many nationalities, and those Americans who used to live in the suburbs might want to take advantage of denser communities in order to get more exposed to different lifestyles and different cultures. Positive examples created by growing diversification and fashionable design of higher density for the middle-class also contribute to the change of housing preferences, because many people like to do what is considered popular and fashionable.

    Research Methods

    Mayers and Gearin conduct their research on the basis of household survey data gathered during the recent years. The authors compare the data of the survey in earlier years with the latest data in order to support their conclusions about changes in consumers’ preferences. Household survey data is a reliable source in such a case: it provides all of the necessary information about the preferences of consumers. Primary sources of information are crucial in the analysis of consumer preferences because they provide exact information on the opinion of consumers and do not carry any reflection of the authors’ point of view, which is typical for secondary sources of information.

    Survey is the most suitable primary research method in case of analysis of consumer preferences, in comparison with interview with expert and focus group discussions. However, the authors could add these methods into the research in order to increase the validity of results. The fact that survey is the only method used is the major weakness of the research, because it questions validity of results. Interview with expert and focus group discussions would be able to provide information about the opinions of top experts in the sector on current and future tendencies in the housing market. It would be particularly useful to include an opinion of the expert who has a polar point of view with the authors and provide evidence why his views are wrong.

    Comparison of conclusions of both articles

    Hazel A. Morrow-Jones, Elena G. Irwin and Brian Roe in their article “Consumer Preference for Neotraditional Neighborhood Characteristics” also make an attempt to analyze the changes in the housing preferences of consumers. In their conclusions, they partially disagree with the opinion of Dowell Mayers and Elizabeth Gearin. Hazel A. Morrow-Jones, Elena G. Irwin and Brian Roe argue that neotraditional neighborhoods are less popular among consumers than conventional neighborhoods. However, their conclusions explain that neotraditional neighborhoods might be considered a very good choice by American customers under certain circumstances, including efficient marketing technologies, additional features available in home and other factors which might attract customers.

    Therefore, the overall conclusion of this article states that there is no direct tendency towards increasing interest of consumers towards neotraditional neighborhoods. Instead, people prefer a “golden mean” between conventional and neotraditional neighborhoods because they have many controversial desires. They want to have only advantages in their neighborhood, even though it might be impossible in many cases because some characteristics are cannot exist together. For example, many people want both to live close to different places of interest and to live in neighborhoods which welcome drivers. It is impossible to satisfy all of the desires of consumers, and developers should focus on only some of them. The fact that neotraditional neighborhoods are not the sole preference of consumers should not discourage developers because these neighborhoods can be made attractive for consumers by creating incentives.

    It is important to mention that the authors of the article “Consumer Preference for Neotraditional Neighborhood Characteristics” applied different research methods from Dowell Mayers and Elizabeth Gearin. Instead of analyzing the results of various household surveys, they created their own survey methodic and distributed their survey among the members of one community. The questions which were included in the survey were composed in order to achieve maximum validity of survey results. For example, the survey included questions concerning people’s preferences towards the house with the same characteristics in different kinds of neighborhoods. The researchers were interested in learning which characteristics of the neighborhood are the most acceptable for consumers, the characteristics of the house itself remaining exactly the same.

    For instance, features of the neighborhood in the survey included availability of a park, rural area, school, stores, the length of preferable commute to work and many other features. The results of the survey showed that an average consumer did not have an exact preference towards any particular kind of neighborhood; for example, when there was a choice between 0 minutes and 60 minutes of commuting to work, an average result was 30 minutes. The researchers thus could conclude that American consumers could be attracted to any kind of neighborhood, as long as they believed they were receiving the highest value. Conclusions of Dowell Mayers and Elizabeth Gearin partially agree with the conclusions of these authors. However, more research needs to be conducted in order to determine whether baby-boomers can actually be claimed to determine the tendency for the whole market.

    Bibliography.

    1.      Mayers Dowell and Gearin Elizabeth. Current Preferences and Future Demand for Denser Residential Environments. Housing Policy Debate. Volume 15, Issue 1. Fannie Mae Foundation. 2004.

    2.      Morrow-Jones Hazel A., Irwin Elena G. and Roe Brian. Consumer Preference for Neotraditional Neighborhood Characteristics. Housing Policy Debate. Volume 15, Issue 1. Fannie Mae Foundation. 2004.

    3.      Xu Eleanor, Xiaoqing Hung-Gay Fung. What Moves the Mortgage-Backed Securities Market? Real Estate Economics. Vol. 33. 2005.

     

    American Housing Market. (2016, Jun 22). Retrieved from https://graduateway.com/analytical-review/

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