Real Estate 411: The Impact of Household Formation on the Future of Housing

According to the Harvard Joint Center for Housing Studies 2012 State of the Nation’s Housing report, average mortgage payments have been lower than gross rents across the nation since 2008. This can largely be attributed to a slowdown household growth and to a drop in immigration.

The Great Recession has left the next generation of buyers with deep scars. With their job prospects looking grim and student loan debt piling high, we are seeing fewer people forming independent households. In fact, the rate of growth between 2007 and 2011—568,000 households—slowed to about half of the rate of growth during the early half of the 2000’s.

As baby boomers reach retirement age, they are less likely to buy more houses, so they will play a smaller part in driving household demand over the next 20 years. Echo boomers (those under age 25 in 2010) are larger in size than baby boomers and have the potential to generate even more housing demand than their parents.

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DRE #00598428
Senior Director, Coldwell Banker New Homes Division
With over 200 condominium, townhome and loft projects successfully marketed

“Fewer properties for sale with such remarkably low interest rates make it a great time to buy and not a bad time to sell”