Echo boomers, the 75 million American born between 1979 and 1995, are a “powerful, powerful underpinning of future demand” for housing, according to Harvard University’s Joint Center for Housing Studies. Echo boomers are expected to help keep demand strong for the next 10 years and beyond, bolstering the markets for rentals and starter homes.
Eric Belsky, executive director of the Joint Center, expects the number of echo boomers aged 25-44 will eclipse the number of baby boomers when they were those same ages by more than 5.9 million. “These impending population shifts have important implications for housing demand over the next decade,” wrote the authors of “The State of the Nation’s Housing 2009.”
As members of the echo-boom generation enter the prime household formation and home buying ages, they will reverse declines in the 25-44 age group created by the much smaller baby-bust generation. The number of households in this age group is projected to increase by between 2.0 million and 3.4 million, resulting in a surge in demand for rentals and starter homes. Meanwhile, baby boomers will add dramatically to the number of households over age 65, in part due to longer life spans and sheer numbers relative to the preceding generation. This is expected to lift demand for retirement and assisted living communities as well as services and home improvements that help seniors age in place. “How this demand is expressed will depend importantly on how much, and how quickly, these households can rebuild their recently decimated wealth,” according to the Joint Center’s report.
Household growth among Hispanics and Asians is also expected to accelerate as the more diverse echo-boom generation reaches adulthood and as immigration continues. In fact, minorities are expected to fuel 73 percent of household growth in 2010-20, with Hispanics leading the way at 36 percent. Noting this group’s lower average incomes and wealth, the authors caution the increase in minority households could add significantly to the nation’s already widespread housing affordability challenges.
Despite the demographic changes, the echo-boom generation now reaching adulthood will start off on a lower trajectory than the baby-bust generation due to the scarcity of entry-level jobs they face. “In addition, with the tight grip on credit, even sharply lower home prices may not be enough to help the echo boomers match the headship and homeownership rates of their predecessors by the time they reach their 30s and 40s” the report’s authors noted. “The best that can be said of the market is that house price corrections and steep cuts in housing production are creating the conditions that will lead to an eventual recovery,” Belsky said. “For now, markets remain under considerable stress.” Nevertheless, the authors added, “Once new home sales rebound and the economy begins to pick up, the aging of the echo boomers should reinvigorate the housing market,” according to the researchers.
Source – NWREporter