Study Suggests “Generational Housing Bubble”

“The housing market has a new problem:  aging Americans” suggest the editors of the Economist magazine in a recent article.  A study released recently by researchers at the University of Southern California suggests that the approaching conversion of baby-boomers from net home buyers to net home sellers will effect a significant shift in the residential housing market.  According to the study, the trend will likely last until at least 2030 when the last boomers turn 65.

The premise of the paper is that an ongoing, robust supply of buyers aged 30-34 who are able to Cfn640 afford housing stock at current pricing is essential for a balanced market.  With sellers potentially outnumbering able buyers by a significant number by 2010, the study’s authors suggest this slack will cause the “generational housing bubble” to pop.  The result:  Downward correction in the price of houses in many states.  Younger buyers’ growing reticence about buying in a downward market may compound this trend, creating a painful cycle for sellers.  And, of course, the erosion of retirement savings locked in housing equity will create additional issues for boomers individually and all of us by proxy.   

Donjek was recently hired by the Local Initiatives Support Corporation (LISC) to examine promising models nationwide for cushioning neighborhoods from the impact of foreclosure-related vacancies.  In the preliminary phase of this project, I’ve encountered an excellent 2006 study of the impact of foreclosure on neighboring property values, and a more recent analysis of the same topic.  These kinds of analytic methods, and the kinds of programmatic responses that LISC seeks to develop, may have additional value – 30 years into the future.

Graphic:  Courtesy of Economist magazine.

Donjek Project: Reuse of Iconic Jacob Schmidt Brewery

Schmidt_army_arch_flickrThe iconic Jacob Schmidt Brewery sits on fifteen acres along the Mississippi River in Saint Paul, Minnesota. The history of brewing on the site can be traced to 1855, three years before statehood. The brewery’s role as a major employer, architectural landmark in the river valley, public source of coveted spring water and – of course – Schmidt beer – has assured its iconic place in the city’s cultural life and historic fabric.

 

The questions of adaptive reuse have for years been daunting, but a new joint ownership between developers Jeff and Craig Cohen and the Fort Road Federation (one of Saint Paul’s district councils) elevates both the profile and the potential for redevelopment in the near term.  Theirs is a mixed-use, multi-phase approach that aims to utilize the bottling house and the leviathan main brewing building, affectionately known as “the Castle.”

Donjek has been retained by the prospective new ownership group (known as “Brewtown”) to assist with project finance, and I am enthused to conduct feasibility analysis for a site of such economic, cultural and historic value to the city and its prospective owners.  While Schmidt and subsequently Minnesota Brewing eventually fell victim to the market pressures facing mid-size brewing operations, the site today has the potential to thrive as a creative, historic mixed-use redevelopment.  I look forward to keeping you posted as the project unfolds!

Photo:  ArmyArch/Flickr.