What Kind of House Will My Daughter Buy

Tonight, I read a great article from last October about Toll Brothers,
the Philadelphia-based mega-builder of houses. In the article, the
reporter told the CEO he had an 8-year-old daughter and asked what
kind of house she would be buying. He was shocked to hear Robert Toll
say she'd be living in her father's house until she was about 40 or
50, and then she'd buy that house off him, spending almost half her
income each month for her mortgage.

As optimistic as Mr. Toll is about the future of his company, he
understands the US house market is reaching a point of maturity. The
article makes an apt comparison between the US and the UK: in the UK,
they pay seven times their annual income for a house that provides 330
square feet per person, while in the US, we pay half that amount for a
house over twice as spacious. It's only a matter of time before the
US reaches the same point of saturation as Europe. Hard to believe,
given how roomy the US is and how cramped Europe feels, but consider
this: New Jersey is close to being completely built out, from a house
standpoint.

We Americans may have to skimp on our sense of entitlement for larger
and more luxurious homes. It's an appetite we can currently whet by
populating developments further and further from city centers, but one
which we'll eventually run out of room to whet. Our lower-density
desires may have to give way to higher-density realities. Good thing
my daughter's learning how to live in a city.

But that's a generation from now. These house-builders still have to
make a living today. And that means scoping out where people want to
live. So you've got to track where people and jobs are moving to,
fighting local political battles along the way that can create
five-year lead times between putting your finger on a piece of land
and being able to start building on it, and duking it out with other
national builders who are trying to do the same thing. It's a tough
job, and where and how my daughter buys her first home depends on it.