Nationwide Housing Shortage
As generations grow older, new waves of people are entering the housing market. After graduating college and beginning their career, people in their 20’s begin to look for their first home. These new buyers make a major influence on the nationwide demand in the housing market. To keep housing rates at a healthy level, the amount of vacant houses need to meet the number of new market entrants. Today, concern has risen over our current housing shortage.
With 318.9 million people in the U.S., and 16,585,415 vacant homes in 2015, only 5.2% of this growing population will be able to find a home to move into this year. According to the U.S Census Bureau, 1,055,000 new homes were built in 2015, which is small in comparison to the number of buyers entering the market. First time buyers are typically between the ages of 20 to 29.
With 13.8% of the country’s population in this age group, there is a larger influx of new buyers than houses available.
Considering the rising student debt and housing prices, the housing shortage just adds to the ever growing challenge for first time buyers.
With baby boomer’s now seeing their millennial grandchildren in their twenties, we are experiencing a large expansion of the number of homeowners in this country. Now these millennials are out of college, starting a career, and looking to buy a house.
Millennials have surpassed their parents’ Gen-X and their grandparents’ Baby Boomer generations as the largest American generation to date.
This influx in housing demand continues to be a challenge for the construction industry, which is still recovering from the 2008 financial crisis.
Something to keep in mind, however, is that the birth rate is not constant. After the millennial generation, the birth rate started to decline. The population of ages 10 to 14, accounting for 6.7% of the population, is .4% less than the age bracket 15 to 19, which is 7.1% of the population. From there, the birth rate continued to decline. Ages 5 to 9 lowered to 6.6% of the population, and ages under 5 are 6.5%. This decrease entails how the housing market will react in the years to come. If the birth rate continues to decline, then we will see a reversing trend in the housing shortage.
Along with many other factors, population is major determinant of long-term market trends. Keeping all other factors constant, a large bubble in our population will affect future housing trends. When construction fails to keep up with the growing demand for more houses, we experience a housing shortage. Then, as demand supersedes supply, prices increase. This is why it is useful to look at the U.S. Census reports to foreshadow future housing bubbles.
At Hart Real Estate Solutions, we stay in tune with the latest market stats to anticipate changes in the real estate market. We don’t just present meaningless data either, we analyze it to find noteworthy correlations and estimate projections of what to expect in the future. Subscribe to our monthly newsletters to keep yourself up to date with the latest news and reports, which may help answer some questions you have about real estate, or just provide you with interesting information. Have any questions about your home? Contact us on our website, or give us a call for a free home consultation at (406) 599-6961.