Thanks for posting this, Doug. It seems like the last key to the puzzle of explaining the present all-time high of home-ownership. It's not just more money and easier rates. It's that more money leads kids and roommates to move out. And perhaps, since moving back with Mom became a trend during the bad times, there was a lot of pent-up demand to form homes.
Michael
On Tue, 9 Feb 1999, Doug Henwood wrote:
> BLS DAILY REPORT, MONDAY, FEBRUARY 8, 1999
<snip>
> But last year "will be the high water mark for housing
> for the next generation," predicts the chief economist at Regional Financial
> Associations in West Chester, Pa., who sees home sales falling and home
> price appreciation slowing in the years ahead. He says so because the
> nation's real estate markets move in tandem with demographics - and the key
> demographic statistic to watch is household formations. In the late 1990s,
> the annual household formation rate has averaged a strong 1.3 million,
> compared with average rates of just under one million in preceding years.
> When times are good - as they have been for the past several years -
> household formations pick up as children strike out on their own earlier and
> that pesky roommate gets his own place. ... But household formations will
> slow over the next few years to an annual average of 1.1 million. Some of
> that slowdown comes from household formations borrowed from future years by
> activity in the previous three years. Baby boomers are at the age when they
> have formed about as many households as they are likely to. And "Baby bust"
> Generation Xers, whose numbers are much smaller by comparison, now make up
> the key household formation group. ... In addition, home sales get a boost
> when people move around. But as the population gets older, it moves less.
> ... But in the end, whatever lull is in store for the house sector is
> likely to last no more than 10 years. ... (The Outlook column, page A1,
> Wall Street Journal).
>
> DUE OUT TOMORROW: Productivity and Costs -- Fourth Quarter 1998
> (Preliminary)
>
__________________________________________________________________________ Michael Pollak................New York City..............mpollak at panix.com