This week’s Economist-probably one of the best I have read recently for trend and investing ideas – highlights an increasing US trend toward the workforce moving to a “nomadic” model as people shake off the chains of working in a traditional office.
The article describes how many people want freedom and the ability to work anywhere – the ability to roam and be “nomadic.” An interesting example is given – it is an asset management company in NYC that never got around to getting an office. Interestingly, their first “office” priority for the original seven employees was getting everyone “Blackberries”, that seemingly indispensible personal device which handles email, scheduling, and cell phone needs. After this first step, they then proceeded to attack the marketplace. Amusingly, later on the question arose to consider office space – all the employees except one voted to continue to go without an office.
One interesting side thought pointed out in this article, which is of particular interest to me and my readers is how this trend causes certain types of real estate (downtown cities and bustling vacation areas such as Cape Cod for example) to grow in popularity and increase in value, and causes other types of real estate, namely single family suburbs, to fall in desire, use and value.
I point this out at every real estate planning workshop i conduct. The fact is, there are demographic trends playing out that are affecting not only real estate values but where people choose to live and how people choose to carry on their lives. For example, increasingly, young people prefer living in lively cities, and inversely, don’t want to maintain a yard or have other household responsibilities. Seniors are selling suburban homes for more convenient condos and senior communities, and baby boomers are selling their big houses when the kids move out and rediscovering their youth by buying in the city so they can enjoy the theater, restaurants, and an enhanced social life – consequently, both boomers and seniors are attracted to the same type of lifestyle preferred by today’s young adult population. The common result of all these trends is, in my opinion, that the demand for single family suburban houses will drop, and so will their values.
My advice to people who own suburban houses outside of Boston (my area) is to consider selling if you dont plan on being there long. Demographics are not favorable – not in lifestyle choices, not in workplace trends, and not in another area I did not discuss, which is geographic trends – more people are moving South for the warmth and for jobs (see Grubb & Ellis’ research on real estate trends here: TRENDS)- cold northern suburbs beware! Unless you plan to own in the most desirable areas, I would be cautious about buying in colder Northern suburbs.