An estimated 13.9 million to 15.9 million additional households will be formed by 2024, making the next decade one of the strongest in housing in U.S. history, according to a new research paper released by the Mortgage Bankers Association. The report, titled “Housing Demand: Demographics and the Numbers Behind the Coming Multi-Million Increase in Households,” shows the housing demand surge will be driven by Hispanics, baby boomers and millennials.
“Household formation has been depressed in recent years by a long, jobless recovery and by a lull in the growth of the working age population,” Lynn Fisher, MBA’s vice president of research and economics, said in a news release. “Improving employment markets will build on major demographic trends — including maturing of baby boomers, Hispanics and millennials — to create strong growth in both owner and rental housing markets over the next decade.”
“As millennials age and create more housing demand, these long-term social trends will mix with demographic changes and the waning hang-over from the Great Recession with a net outcome of increased demand for housing,” Jamie Woodwell, MBA’s vice president of commercial/multifamily research, said in the release.
According to the report, housing growth will include:
- 5.5 to 5.7 million more Hispanic households in 2024 than in 2014;
- 3.4 to 5.0 million more non-Hispanic white households;
- 1.8 to 1.9 million more Asian households;
- 2.4 million more black households;
- 730,000 to 890,000 other households.
Growth will be driven by baby boomers, with between 12.3 million and 12.9 million more households with people ages 60 and over projected by 2024 than there are today. Millennials also will be a key component of growth, raising the ranks of households ages 18 to 44 by between 4.1 million and 5.1 million by 2024, according to the report. Because of Generation X’s relatively small size, the report projects there will be 2.5 million fewer households in the 45-59 age group than there are today.
The MBA’s analysis bases its lower-end growth projections on if sex-, age- and race-specific household formation rates remain at 2014 levels. The upper-end projections are based on demographic data adjusted to account for historical averages and economic and societal trends. At the upper end, it would mean a growth rate of 1.6 million households per year which would make the next decade one of the strongest in housing in U.S. history, according to the report. Boosted by the aging of the population, the aggregate home ownership rate will rebound to between 65 and 66%.
A link to the entire study can be found at: http://mba.informz.net/MBA/data/images/15292_Research_Growth_White_Paper.pdf