Increase in household formations will lead to a boom in housing demand
THIS ARE SOME QUOTES FROM A RECENT ARTICLE I READ
For a while we have been hearing about 2 trends in the real estate industry that have not been good. – a declining rate of homeownership and a lack of household formation. This is starting to change as as the huge millennial generation has reached maturity, found jobs, and moved out on their own,
The Mortgage Bankers Association (MBA) has just released a paper forecasting housing demand over the next ten years. The paper, Demographics and the Numbers Behind the Coming Multi-Million increase in Households was written by Lynn M. Fisher Vice President, Research & Economics and Jamie Woodwell Vice President of Commercial/Multifamily Research
“By 2024, demographic and economic changes will bring what could be one of the largest expansions in the history of the U S housing market – 15 9 million additional households.”
“Household growth will be led by 5.7 million more Hispanic Households, 5.0 million more non-Hispanic White households, 2.4 million more Black households, 1.9 Asian households, and 890,000 more “other” households.”
“The number of new minority owner households will be more than one-third higher than the number of new non-Hispanic White Households. Among renters the non-Hispanic White numbers will decline.”
The authors state that the changes outlined above will flow through to changes in demand for single and multi-family housing. The aging of the population, in particular Millennials, will generally boost demand for single-family housing and slow increases in demand for multi-family
This is a good reason to buy and hold.
