We all know the population will grow and age in the future. The Mortgage Bankers Association (MBA) 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 US housing history. At the upper end, this results in a growth rate of 1.6 million households per year. Boosted by the aging of the population, the aggregate home ownership rate will rebound to between 65 and 66%. Who will lead the formation of these household is the important part of the story – this will guide agents where to focus their business efforts in the future.
In their new research paper, 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. Researchers find that 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 study also details, by race, there will be 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.
Lynn Fisher, MBA’s Vice President of Research and Economics, commented, “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. 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.” With millennials aging, long-term social trends and demographic trends mixing, and hang-over waning from the Great Recession, the net outcome will be significantly increased demand for housing.