The Joint Center for Housing Studies of
Harvard University just released their annual State of the Nation’s Housing 2012. In the report, Harvard
explained that, starting this year and continuing over the next twenty years,
the echo boomers (born in the late 1970s and early 1980s) will drive the
housing market.
“After several false starts,
there is reason to believe that 2012 will mark the beginning of a true housing
market recovery.”
As we reported in our InfoGraphic
on Friday, adults under the age of 35 have decided to stay at home with their
parents instead of purchase their own home. As the Harvard report states, it is
not because they don’t believe in the value of homeownership:
“Although young households have
increasingly opted to rent in recent years, most still aspire to homeownership.
The late-2011 Fannie Mae National Housing Survey found that 86 percent of
renters aged 18–34 believe they will ultimately own homes. In addition, close
to 70 percent of respondents to both the Fannie Mae survey and the University
of Michigan Survey of Consumer Attitudes felt that it was a good time to buy.
In fact, the monthly mortgage payments for the typical home currently compare
more favorably to rents than at any time since the early 1970s.”
The report projected the impact
of these echo boomers over the next two decades
Over the next 10 years…
“… the most important drivers of
household growth are the size and age structure of the adult population.
Assuming the economic recovery is sustained in the next few years, the growth
and aging of the current population alone— including the entrance of the echo
boomers into adulthood— should support the addition of about 1.0 million new households per year over the
next decade.”
Over the next 20 years…
“Over the next 20 years, the echo boomers have the potential to
spur new home demand to an even greater extent than their parents did beginning
in the 1970s. The good news for housing
production is that this new generation already outnumbers that of the baby
boomers at the same ages. With even a modest lift from immigration, the
echo-boom generation will grow even larger as its members move into the prime
household formation years.”
As housing affordability
reaches historic lows, we believe more and more of the echo boomers will take
the plunge into homeownership.
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