Central Planning vs Free Market



I am going through the Met Councils report of households based on the latest 2010 Census data.  This report was released this May.

There are pages and pages of these map charts ranking race, age, family size, workforce etc.  These are just two charts to give you an idea of how the “Central Planners” are looking at things.

Don’t get me wrong, there is some great information in these reports.  But the real estate market is more than stats and figures, it is a “free market“. (well, sort of. That is a topic for another post.)

If this report could be summarized in 4 short statements it would be these:

  • The average household size is getting smaller. 
  • The population is aging
  • The number of single parent households is up.
  • The number of single occupant households  is up.

Many draw a conclusion that because the household size is shrinking and the family structure is changing, that there will be huge demand for smaller homes.   This would probably be a reasonable conclusion if you don’t take into account for how much more “stuff” everyone has and the “human” side of the equation.  People still like elbow room and I think if it is within reach, the consumer will choose a larger home over a smaller home.

Will the 65 and older really want “one level maintenance-free living”?   I used to think so…  but now I believe this age group is going to stay put. 

There will be a  percentage of this age group  that move into one level living townhomes, for the lifestyle.  But most I believe will choose single family home living and hire services out if they need to.

Two main reasons I think this will happen:  

  1. What the economy has done to their retirement funds. 
  2. They like the independence and lifestyle of their single family homes.

Besides, who believes they are old?  My grandmother was 98 years old and considering moving into “apartment style” living.  She looked at the family and said “I don’t want to live next to a bunch of old people.”.   Once I heard her say that, my whole perspective changed.  I was looking at this “market” segment  from a “Central Planning” perspective  and never considered this market as “people” making “free market choices”.  Her comment opened my eyes to the human side of this equation vs. the “Central Planning”  ‘goose step’ that is taught in school.

With that in mind, there does sometimes come a point in a person’s life when they do need “assisted living“.  That market will evolve as the population continues to age.

In the meantime, we have a Government organization in the form of the Metropolitan Council making “Central Planning” decisions with no tie to the “free market” or the “human” side of the equation.  Not everyone wants to live in a highrise on a light-rail line, no matter what age they are.

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Filed under real estate, new construction, development, wayzata real estate, foreclosures, economy

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