The compelling new report Housing in America: The Next Decade reveals that the housing markets in the United States are at an inflection point. In time, markets will stabilize, but the old “normal” will not return. New markets will evolve once household formation recovers as the U.S. population will grow by 30 million this decade, producing strong demand for housing.
The age of suburbanization is over and the market for urban living will grow. The strongest markets will be those with vibrant 24/7 lifestyles, including many central cities as well as emerging suburban town centers or “boutique cities.” This urban revival will be driven by four demographic groups:
• Older baby boomers (56 to 64), a senior population unprecedented in size and looking for a more urban lifestyle;
• Younger baby boomers (46 to 55) already in the suburbs, many with “underwater” homes and unable to move to new jobs;
• Generation Y (late teens to early 30s) the largest US generation ever, who want an urban lifestyle and will want to (and have to) rent longer than past generations; and
• Immigrants and their children, who will comprise the vast majority of the increase in the U.S. population.
The homeownership rate, now 67 percent, will fall to the low 60s, a level not seen in two decades. This will produce strong demand for rental housing.
Workforce housing will remain a challenge. Incomes of the workforce will be constrained; housing where they work will be unaffordable despite the crash. But if they move to the outer suburbs for inexpensive homes the cost of long commutes will eliminate any savings.
Green housing will evolve and soon after the end of the decade, new homes will produce the energy they use; the “net-zero-energy” home will become the standard.
John McIlwain authored "Housing America: The Next Decade." McIlwain is a senior resident fellow and the J. Ronald Terwilliger chair for housing at the Urban Land Institute. He also serves as chair of the Center for Housing Policy, NHC's research affiliate.