The Next $50 Trillion

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MISSOULA FUTURE Arthur C. Nelson, Ph.D, FAICP Presidential Professor & Director Metropolitan Research Center University of Utah June 3, 2010 http://www.panoramio.com/photo/28570763

America Grows 200 million in 1968 300 million in 2006 400 million in 2034 500 million in 2050 America adds 100 million people faster than any other nation except India and Pakistan – But faster than China. Source: Arthur C. Nelson, Presidential Professor & Director of Metropolitan Research, University of Utah. Header credit: http://www.missouladowntown.com/

464 billion square feet

2040

132 billion square feet

332 billion square feet

287 billion square feet 155 billion square feet

2010

2040

Source: Data from Arthur C. Nelson, Presidential Professor & Director, Metropolitan Research Center, University of Utah. Image from Architect magazine, premier issue, November 2006.

Population Growth 2010-2030 Area Missoula

2010 110k

2030 140k

Change Percent 30k 30%

Numbers may not calculate due to rounding.

Source: Arthur C. Nelson, Presidential Professor & Director, Metropolitan Research Center, University of Utah. Numbers may not add or calculate due to rounding. Figures adapted from 2008 Economic Report to the Governor, Governor’s Office of Planning and Budget.

Residential Units 2010-2030 Area 2010 Missoula 47k

2030 59k

New/Rebuilt 16k

%’10 34%

Numbers may not calculate due to rounding.

Source: Arthur C. Nelson, Presidential Professor & Director, Metropolitan Research Center, University of Utah. Numbers may not add or calculate due to rounding. Figures based on residential units per capita 2000 adjusted for declining household size, plus loss factor based on census analysis.

Employment Growth 2010-2030 Area 2010 Missoula 69k

2030 98k

Change Percent 29k 42%

Numbers may not calculate due to rounding.

Source: Arthur C. Nelson, Presidential Professor & Director, Metropolitan Research Center, University of Utah. Numbers may not add or calculate due to rounding. Employment includes full- and part-time jobs as defined by BEA.

Nonresidential Space 2010-2030 Area 2010 Missoula 36M

2030 49M

New/Rebuilt %’10 51M 130%

Numbers may not calculate due to rounding.

Source: Arthur C. Nelson, Presidential Professor & Director, Metropolitan Research Center, University of Utah. Numbers may not add or calculate due to rounding.

200

Life-Span of Building Function

Years

150

100

50

0 Re tail

War e hous e Nonre s . Office Education Hom e s

Source: Arthur C. Nelson, Presidential Professor & Director of Metropolitan Research, University of Utah, based on DoE Commercial Buildings Energy Consumption Survey.

Bottom Line Construction Missoula 2010-2030 Residential Nonresidential Infrastructure Total

$ 5 billion $ 5 billion $ 2 billion $12 billion

Source: Arthur C. Nelson, Presidential Professor & Director, Metropolitan Research Center, University of Utah.

University of Montana Indicator Students Faculty Research Sports

2010 15k 700 $70M Big Sky

2030 22k 1,000 $150M WAC/MWest

Source: Arthur C. Nelson, Presidential Professor & Director, Metropolitan Research Center, University of Utah. Numbers may not add or calculate due to rounding.

How Does It Grow?

Households are Changing Household Type

1960

2010

2030

US HH with Children 48% 33% 26% HH without Children 52% 67% 74% Single/Other HH 13% 29% 33% _________________________________________ Missoula HH with Children 34% 30% HH without Children 68% 68% Single/Other HH 31% 35% Source: Arthur C. Nelson, Presidential Professor & Director, Metropolitan Research Center, University of Utah.

Buy-Sell Rates by Age Cohort AHS 10.0 9.0 8.0 7.0 6.0

Buy Rate

5.0 4.0 3.0 2.0

Sell Rate

1.0 0.0 2024

2529

3034

3539

4044

4549

5054

5559

6064

6569

7074

7579

80+

Source: Dowell Myers & SungHo Ryu, “Aging Baby Boomers and the Generational Housing Bubble: Foresight and Mitigation of an Epic Transition”, Journal of the American Planning Association 74(1): 1-17 (2007).

Relocation Choices of Seniors Housing Type Attached Renter

Before Move 24% 20%

After Move 54% 59%

Source: American Housing Survey 2003. New movers means moved in past year. Annual senior movers are about 5% of all senior households; 75%+ of all seniors will change housing type between ages 65 and 80.

1.60

WEST

1.20

MIDWEST SOUTHSell NORTHEAST The Great Senior Off

Buy

0.80

0.40

0.00

-0.40

-0.80 Sell

-1.20

Source: Dowell Myers & SungHo Ryu, “Aging Baby Boomers and the Generational Housing Bubble: Foresight and Mitigation of an Epic Transition”, Journal of the American Planning Association 74(1): 1-17 (2007). Figures for net buying or selling rate age. S M

Ca l Al ifor as ni W ka a y M om on in W ta g a na Ha shin w g Co ai to n lo i O ra re d Ut go o a n Id h a Ne ho w Ar M i z ex Ne on ic va a o da M ic In hig d a Ill ian n in a O ois hi W o is No con r s Io th in w Da M a ko in ta Ne nes b o Ka ras ta ns ka So a ut s h Da Lo ko ui ta W sia es n a Vi t V rg i M ini rgin is a ia Ke sou nt ri Al uc a k M b am y is Te siss a x i O as ppi kl G aho eo m Te rg a n ia No ne r ss Ar th ee k C So ans aro u a li Fl th s na or C id ar a ol in Co a nn Ne e w ct Rh Y icu o o t Pe de rk nn Is M sy la ar l nd M yla van ai n i Ne ne d a w M Je as r Ve sa sey r ch Ne mo us w n e D H t tts

Share of Population 65+

Source: Arthur C. Nelson, Presidential Professor & Director, Metropolitan Research Center, University of Utah.

Population Change by Age, 2010-30

Source: Arthur C. Nelson, Presidential Professor & Director, Metropolitan Research Center, University of Utah.

Cautious Buyers   



US lost $8 Trillion in real estate equity in 2000s. Foreclosures highest since the Great Depression. US average home value appreciation: 1972-2009 = 0.8%. But: As a form of “savings” for retirement plus providing a place to live, ownership has important benefits even if the home does not appreciate in “real” dollar terms.

Share of Growth 2010-2030 US HH Type With children Without children Single/Other Missoula With children Without children Single/Other

Share 14% 86% 32% 13% 87% 35%

Source: Arthur C. Nelson, Presidential Professor & Director, Metropolitan Research Center, University of Utah.

New Housing Market Realities Sub-prime mortgages are history  Alt-A mortgages no more  FHA-like conventional mortgages king  “Jumbo” loans expensive and difficult  Meaning 

 Smaller

homes  Smaller lots  More renters

Life-Cycle Mix

Income Mix

Ethnic Mix

Housing Mix

Sidewalks

Stores, Eating

20 10 0

School Walk

80 70 60 50 40 30

Transit Access

Percent

Emerging “Urbanity” Preferences

Neighborhood Featur e

Source: National Association of Realtors, American Preference Survey 2004.

Second-Home Market Overrated?    



Myth: Empty-nesters & seniors buy 2nd homes Fact: Only 4% of HH 65+ have second homes 70% of second home owners aged 35-64 Detached new second home demand: 1990s = 900k 2000s = 600k 2010s = 300k 2020s = 200k 2030s = 100k Reality: Wealth used for children’s homes

Source: Estimated by Arthur C. Nelson, Metropolitan Institute at Virginia Tech, from American Housing Survey and Second Homes: What, How Many, Who and Where? Harvard Joint Center for Housing (2001).

Blue = tracts where housing costs 30%+ of income. Source: Center for Neighborhood Technology.

Blue = tracts where housing + transportation costs 45%+ of income.

Increasing Household Size? 2.39  Actual 2000 2.30  Assumed for 2008 2.42  Actual in 2008 2.18  Assumed for 2030 2.50  Trend to 2030

Multi-generational Household Share

30

Multi-Generational Households 25

20

15

10 1900 1920 1940 1960 1980 2000 1910 1930 1950 1970 1990 2008 Year Source: Adapted from The Return of the Multi-Generational Family Household (Pew) by Arthur C. Nelson, Presidential Professor & Director of Metropolitan Research, University of Utah.

3-Family McMansion (Accommodates 15) Patio

Declining Ownership?

1995

2005

2015

Source: Arthur C. Nelson, USA Today (2009); Harvard Joint Center for Housing Studies, State of the Nation's Housing , 2009

The Opportunity

The New Promised Land?

Tear Up a Parking Lot, Rebuild Paradise Large, flat and well drained Single, profit-motivated ownership Major infrastructure in place 4+ lane highway frontage  “transit-ready?” Committed to commercial/mixed use Can turn NIMBYs into YIMBYs Slide title phrase adapted from Joni Mitchell, Big Yellow Taxi, refrain: “Pave over paradise, put up a parking lot.”

Re-Building Capacity Calculation “Ripe” Redevelopment Acres by 2040 6.0M Minimum Share Redeveloped Redeveloped Acres 15-25 dwellings + 30-50 jobs @

Percent Residential Absorption 80%+ Percent Employment Absorption

Result

33% 1.5M 1.5FAR

100%+

Source: Arthur C. Nelson, Presidential Professor & Director, Metropolitan Research Center, University of Utah

“Greyfield” Conversion

Courtesy of Joseph Kohl; Dover, Kohl & Partners.

Source: http://www.usmayors.org/brownfields/library/greyfieldstogoldfields.pdf

Redevelop Parking Lots Conversion of half or less of commercial strip and big box parking lots from 0.25FAR to 0.70FAR can: Accommodate all new jobs. Accommodate all new housing demand. Meet large share of affordable housing needs. Can tie the city together with bus or even trolley transit.

Nelson’s Downtown Law Minimum 1% of metro residents want to live downtown.  Good amenities + accessibility + setting = 2%-3%.  Downtown Missoula demand 2030 = 2,000+ residents 1,000+ units. 

Bottom Line Plan for renewal of nonresidential properties.  Identify the niche markets: 

 University

alum opportunities;  Senior and empty-nester options; and  Foot-loose “nationals” who can be anywhere. 

Cater to the strengths of:  University

 Setting  Talent

THANK YOU

http://metroresearch.utah.edu/

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