The forecasting models for housing consider a number of variables in shaping outlook for housing demand. Demographics that play into forecasts no doubt suggest that discussions examining the role of affordability in conjunction with unemployment statistics among young people is significant. Bloomberg examines some troubling statistics here, providing us with “perspective on what it means to have entered adulthood amid the tremors of the Great Recession.”
One narrative in play points to the increasing number of young people living at home. In the U.S., it’s reported that 36% of 18 to 31-year-olds were living in their parents’ homes in 2012 – the highest proportion in 40 years. The trend is similarly significant north of the border, where we’re told here the proportion of Canadians in their 20’s living with their parents has doubled the past 30 years. It may also be true in other countries. In the UK for example, Mark Griffith at IPPR, explains here that “Short-term recession-related unemployment is colliding with long-term housing failure, to create intense pressures on young people and their housing choices. We are seeing a regression towards much less mobile households as a result.”
While questions abound as to how much this pattern of “living in mom and dad’s basement” is contributing to pent-up demand in the creation of new household formations, consider the National Association of Home Builders bullish (Hat Tip: Mark Kennedy, CIBC). The NAHB forecasts:
- 1.15 million U.S. housing starts this year, up 24.5% from last year’s total of 928,000 units
- Single-family production to increase 32% to 822,000 units – and an additional 41% to 1.16 million units in 2015
- 333,000 multifamily starts in 2014, up 9% from 306,000 last year.
“There are five key points to the turnaround. Consumers are back, pent-up demand is emerging, there is a growing need for new construction, distressed sales are diminishing and builders see it.”
– David Crowe, NAHB Chief Economist