Changes in demographics may have lasting impacts on the market.
Today we wanted to reach out to you to wish you a very happy New Year and to discuss a demographic trend that may affect the housing market in 2022 and beyond.
The millennial generation is larger than the baby boomer generation, so you can imagine the influence they’re going to have on virtually everything that we do. The average age of the millennial generation is 33 years old, which is prime home-buying age; over the next five years, we predict that 23 million millennials will be in the housing market. That will definitely have an effect on demand because we’re already between five and six million homes short of the current demand.
On the other end of the spectrum, the elderly are not as interested in moving to assisted living centers or care facilities as they are in staying in their own homes, where they can make modifications to make them more accessible. There are all sorts of services available that can come into the home and help with housework, meals, medical care, and so on. Because of that trend, those homes aren’t going on the market.
Another interesting factor is that today, only 50% of couples are getting married. For perspective, around 75% of couples were getting married back in the 80s. Some are in relationships that will still be starting families, but many are buying as single people who don’t need all that extra space.
Similarly, only 31% of today’s households have children, which is a 100-year low. Though housing prices were once related to the quality of the schools in the area, that might not be that big of a deal going forward. In fact, as working from home becomes more popular, many companies are making changes to allow employees to work remotely. For many, there’s just no reason to move to homes near better schools or close to work.
Another way these trends will impact the market has to do with traditional moving times. People often move in the summer when school is out, but as fewer households have children to worry about, seasonal sales trends will be affected.
It’s also important to understand that the population will change depending on the municipality. For instance, it’s predicted that in Detroit, there will be less than a 1% growth in the population in the coming year. That contrasts with Miami, where 14% growth is expected. Therefore, you’d expect the housing prices in Miami to escalate faster than they would in a market like Detroit. Right now, experts’ opinions vary on what is going to happen with housing prices in 2022, but on average, we predict around a 5.7% increase in home prices
If you have questions about the market and how conditions affect you, please give us a call or send an email. We’re here to help you.