Younger market for Ventura?

Nothing doing for the next two years when it comes to building new homes. But then demand from a new generation of Californians will mean an updated version of the American Dream.

That's the message I heard this week at a conference in San Francisco on "Multi-Family Housing Trends," held each year in conjunction with the massive Pacific Coast Builders Conference. I attended to participate in a unique session that encourages developers to partner with the public sector and community to produce more compatible and sustainable development. Called "Planning for Approvals: Real Solutions in Real Time," the audience watches as the developer's "cookie cutter" site plan is rejected, three alternatives are designed and eventually through interaction with the city government and the community, a far better final plan emerges. Although the actual site is a real one, I play the city manager of the fictional town.

The conference kicked off with a compelling talk by one of the nation's leading housing analysts, Robert Gardner of the widely respected Robert Charles Lessor & Co. Here are the grim factors that will continue to depress the residential development business:
• Low consumer confidence levels
• Too many units in the resale market and in foreclosure
• Uncertainties about prices and values, keeping legitimate buyers on the sidelines
• Unrealistic expectations regarding consumers’ housing purchase power
• Questions about the health of the banking system
• Concerns for the degree of the sub-prime /foreclosure problem

Gardner expects home prices to continue their decline by another 10-15%, with a real possibility of another 15-20% drop if the economy continues to sputter. Under that scenario, prices don't pick up again until 2012.

Already across the western U.S., prices have fallen back to 2004 levels and sales have dropped 54% off the 2005 pace. There are, of course, significant regional differences, as well as wide variations when comparing new vs. resale and single family homes vs. condos. But out of the welter of data, a clear trend emerges for Southern California: although we have too many new and foreclosed homes on the market, buyers are reluctant to buy into a falling market. That has made apartment building a far safer bet.

We're seeing that in Ventura. After a major homebuilder dropped its plans to build on both sides of the railroad tracks on the bluff overlooking Harbor and Seaward, a local developer has submitted a plan for the southern side of the site that calls for building more than 300 rental units. The plan was given a cautious go-ahead from the majority of the Council, with the clear signal that there should be a mix of ownership units as well. Out on the east side, another developer has submitted another plan for more than 300 units near the Johnson Drive freeway entrance next to the Century 16 shopping center.

Whether these projects will win approval or ever be built is an open question. But there was a real sense of gloom about moving forward with "for sale" units in most markets. Not only is the market continuing to deteriorate, banks and other financeers are under glaring scrutiny about the loans and investments they make.

In these predictions, Gardner is very much in the mainstream. But what made his presentation compelling was his analysis of future trends. In his view, we are not just looking at a cyclical downturn: we are looking at a generational sea change away from suburban tract homes and toward higher-density urban living.

What will drive this new model? Higher gas prices, obviously. But much more importantly is a younger generation looking for a hipper, greener and more affordable lifestyle -- as well as part of the aging baby boom generation looking for a lower maintenance, higher amenity alternative.

Here are some of the demographic factors drivng this emerging trend:

• Large households are plunging (25% decrease 200-2006 in households of more than 5 people) while small ones are growing (almost 20% increase in households of 1 or 2.)


• Over the next ten years, the age group that has been buying larger suburban homes (40-54 year olds) will drop by almost 4 million, while the younger group (25-39) will surge by more than 5 million. And aging baby boomers looking to potentially downsize will swell the ranks of 55 and up by nearly 14 million.

The huge baby boom generation is leaving the stage of wanting to move up (which usually meant moving outward from the urban core.) The next generation (the so-called Gen X cohort born between 1965-1978) is much smaller than the Gen Y group (born between 1979-96.) Raised on "Friends" and "Seinfeld," surveys that fully 71% of that group expect to live in an urban rather than suburban setting -- and one-third say they would pay more to not have to drive to work, shopping and entertainment. Rising fuel prices will only make that trade-off more attractive.

These trends are already reshaping metro areas like Portland and the Silicon Valley. In Portland, for example, the proportion of owners living in attached homes has shot up 54% in the last six years.

Here are Gardner's predictions about an evolution in the American Dream:

• Intown areas and inner suburbs will remain on an upward trajectory
• Diversity, walkablity and proximity to jobs will be keys to site selection and premiumsRenters will represent a steady stream of demand as Gen Y will shift toward homeownership in 2018
• Product types -- smaller and affordable and should have focus on design over size
• Suburbs will need to evolve to remain attractive to Gen Y with more walkable areas, including new and existing town centers – urbanizing suburban commercial nodes
• Master-planned communities will need a greater variety of product and higher connectivity

So, if Gardner's case is on target, what does it mean for Ventura?

The community Vision adopted in our 2005 General Plan actually anticipated this shift. More in-town attached housing in our historic Downtown and along the transit corridors of the Westside and Midtown. A greater variety of home types in more suburban settings. Improved transit as well as making walking and biking safer, more convenient and more attractive. Encouraging a greater mix of uses so residents have a choice about whether they get in their cars to shop, work or seek outdoor or indoor recreation. Promoting high wage, high value jobs to keep residents closer to home for making their living.

These principles appeal both to the younger cohort looking to buy their first dwelling as well as empty nesters ready to give up the big home and big yard. That puts Ventura in a strong position for long-term success as we welcome the next generation of families to live the American Dream along the California coast.