by Bill McBride on 8/27/2015 05:29:00 PM
Thursday, August 27, 2015
The Mortgage Bankers Association released a new report this week: Demographics and the Numbers Behind the Coming Multi-Million increase in Households by Lynn Fisher and Jamie Woodwell.
The report has some great section titles such as "Demographics is Destiny" and "35 is the new 25". These are two topics I've written about extensively. See: Demographics and Behavior and Are Multi-Family Housing Starts near a peak?
The MBA estimates the number of households will increase by between 13.8 million and 15.8 million over the next decade. Add in some demolitions and some second home buying, and that would suggest housing starts of well over 1.5 million per year. Housing starts are running at about 1.1 million so far this year (1.2 million SAAR in July). This would suggest a further increase in starts.
The MBA presents two scenarios (both seem plausible although I haven't checked the numbers).
Under these conditions, the U.S. will see 15.9 million additional households — 12.7 million owner households (versus 10.3 million in scenario 1) and 3.1 million renter households (versus 5.6 million in scenario 1) — over the next ten years.Both scenarios suggest a shift to more owner built units (and more new home sales).
Note: For a current look at household formation, economist Jed Kolko wrote last week: Who Is Actually Forming New Households?