The Mortgage Bankers Association believes that between 13.9 and 15.9 million additional households will be formed by 2024, making the next decade one of the strongest in housing in U.S. history.
In their new research paper, titled Housing Demand: Demographics and the Numbers Behind the Coming Multi-Million Increase in Households, the MBA’s researchers conclude that 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,” said Lynn Fisher, MBA’s Vice President of Research and Economics. “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.”
Her take was expanded on by Jamie Woodwell, MBA’s Vice President of Commercial Real Estate Research.
“When it comes to starting new households, age 35 is the new 25, as younger Americans are spending a longer time in school and delaying major life events like getting married and having children,” Woodwell said. “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.”
Household growth will include, by race:
- 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; and
- 730,000 to 890,000 more “other” households.
Growth will be driven by Baby Boomers, with 12.3 to 12.9 million more households age 60 and over in 2024 than there are today. Millennials will also be a key component of growth raising the ranks of households age 18 to 44 by 4.1 to 5.1 million, the researchers find.
The lower end of the projection is the result of MBA’s analysis of demographic trends if sex-, age- and race-specific household formation rates remain at low 2014 levels.
The upper end of the projection is the result of MBA’s analysis of sex-, age- and race-specific household formation rates adjusted to account for historical averages and economic and societal trends.
At the upper end, this results in 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. Boosted by the aging of the population, the aggregate homeownership rate will rebound to between 65 and 66%.
Click here to read the full study.