The Bipartisan Policy Center made a splash earlier this month with a wide-ranging study of the Echo Boomer generation that highlighted many of the demographic, economic and sociological factors that would contribute to the generation’s economic impact, and it has done it again with an equally broad overview of the challenges and opportunities for the housing industry in the decades ahead.
Focusing on many of the same topics as the earlier study, the research looks at population growth, minority homeownership, and, in correlation with that Echo Boomer study, how the newest generation of professionals will affect homeownership.
Regarding population growth, the study predicts that between now and 2050, the U.S. will add 93 million people to its total population, and the National Association of Realtors has estimated that such a growth will translate to 43 million new housing units (either for purchase or rent) to meet the new demand.
For minority homeownership, the study looked at how disproportionate homeownership is across ethnic lines. African American homeownership is 28 percent lower now than in 2000, and Hispanic homeownership is 25 percent lower than Caucasian homeownership. What the study doesn’t mention, unfortunately, is a new study from NAHREP that featured some rather spectacular anticipations for Hispanic homeownership that we wrote about earlier this week.
Perhaps the most immediately important topic of the study, though, dealt with the Echo Boomers, the generation that is expected to absorb 75 to 80 percent of the approximately 26 million properties that will enter the marketplace in the next 18 years. The study highlights the economic challenges that the Echos face (no generation was more affected by the current economic downturn), but James Surowiecki of The New Yorker pointed out in a recent article the flip side of that view point – the considerable pent-up demand that Echos will unleash once they are economically able.
Between 1947 and 2007, Surowiecki wrote, the number of households in the U.S. grew every year along with the country’s population; in 2008, 2010, and 2011, though, that trend was decidedly halted by the housing and economic crises, and the number of households fell even as population grew.
The reason was Echo Boomers delaying their introduction to the housing market. Rather than entering the professional world and either buying or renting a property, as their parents and grandparents had, Echos opted instead to live with their parents, and the homeownership rate has suffered as a result; but again, Surowiecki’s most important point is that once those Echos enter the market, the demand will be formidable, and spending on other durable goods, such as washing machines and other appliances, will rise with the formation of new households.
Is it safe to say, then, that if any further economic and housing policies are pursued, that they should attempt to stimulate homeownership among the Echo Boomers? What do you think?