Between now and 2050, the U.S. is expected to grow to about 403 million people. It’s about 310 million today. That’s almost 100 million more people and they have to live somewhere, and looking at today’s total inventory of homes, we’ll need 43 million more units.
These are sales and rental lease-ups that are forecast to happen regardless of the ups and downs of the U.S. economy, and that helps to put in perspective what your business opportunities are in the years ahead.
The forecast is part of a report, called “Demographic Challenges and Opportunities for U.S. Housing Markets,” that just came out from a group called the Bipartisan Policy Center, which was started in 2007 by four former U.S. Senate leaders from both parties who are commissioning substantive research to find objective policy solutions to pressing issues.
NAR researcher Selma Hepp was part of the research team that prepared the study, She joined researchers from the University of Southern California and the Urban Institute.
Among their important findings is how the composition of the sales market is changing with the aging of the baby boomers and the arrival of the echo boomers. The baby boomers over the next two decades will be downsizing in a big way, in many cases getting out of the housing market altogether.
The result is expected to be the addition of some 11 million for-sale homes in markets from aging boomers between 2010 and 2020 and another 15 million between 2020 and 2030.
Who will buy all those units? The echo boomers, who are expected absorb 75-80 percent of them.
Lost ground. (Click to enlarge.)
Echo boomers are the children of baby boomers. They were born between 1981 and 1995, and they’re far more diverse than previous generations. That means disparities in home ownership rates between white households, African Americans, and Hispanics could close, assuming poorly thought-out mortgage financing rules don’t get in the way.
Right now, times are not good for minorities from a home ownership perspective. They were hit disproportionately hard by the housing crisis (see the nearby graph), and as the report shows, their home ownership rates have gone down the most in the last several years, widening the ownership gap with white households. So, until markets turn around, the country is losing, not gaining, ground in that respect.
The bottom line is, what’s decided in Congress and in the administration over the next several years to change the mortgage finance market will be crucial to the options available to echo boomers and others in deciding whether to rent or buy, and therefore whether wealth accumulation through owning will be in the cards for them.
As the researchers conclude in their report, “Whether for newly forming households or long-established ones . . . housing policies that emerge by the end of this decade have the potential to affect significantly the wealth portfolios of tens of millions of American families.”