Real Estate Voices California Association of Realtors, Nov. 13, 2013 Dowell Myers Demographic Waves...

transcript

Real Estate VoicesCalifornia Association of Realtors, Nov. 13, 2013

Dowell Myers

Demographic Waves of Housing Demand: Aging and Immigration

Overview of Topics1 The Overlooked Equation:

Housing = Demography, modified by financial factors2 Population Age Waves

-- Multifamily Trend and Outlook-- Baby Boomer Sell-Off & Replacement Buyers?

3 Immigration Waves and Settlement

Dowell Myers, USC Price

4 What is the New Normal?

-- Extreme Upward Mobility into Homeownership

The Overlooked Equationof Housing & Demography

People live in housing; demand = occupied units

Age regularities of demand, modified by economic conditions; demography is not a dummy variable

Long lag effects:1. Arrive in market 25 years after

birth2. Live in houses 25 years after

purchase3. Generational bubble of Baby

Boomers

Growth in new households is crucial, also their exits

1. Native-born come of age2. Immigrant arrivals3. Soaring numbers of seniors are a

challenge

Major demographic dimensions: 1. Age and generation 2. Immigrants and native-born 3. Race and ethnicity

These dimensions intersectin a new generational partnership

1. Aging Baby Boomers require

younger replacements in the workforce and in housing

2. Soaring numbers of seniors will depend on a much more diverse younger population

Impact of Population Age Waves

Total Population of the United Statesin millions

U.S. Population by Age Each Decadein millions

Source: Dowell Myers, USC; Data from Census Bureau

U.S. Population Growth Each Decade in millions

Source: Dowell Myers; Data from Census Bureau

Under 15 15-24 25-34 35-44 45-54 55-64 65+-10.0

1950s 1970s 1990s 2010sDowell Myers, USC Price

Minority Dictatorship of New Construction

Everyone else livesin existing housing

Only1% of households

(growing segments) dictate type of new

construction

Native-Born Turning Age 25, Plus Immigrant ArrivalsTotal Demographic Growth

Myers and Pitkin ‘09

Myers and Pitkin, “Demographic Forces and Turning Points”

3.Multifamily

Downturn and Revival

Age Profile of Tenants in Recently Built Apartments

Source: Dowell Myers, USC; Data from Census Bureau Dowell Myers, USC Price

1960s 1970s 1980s 1990s 2000-06

2007-08

2009-10

2011-13

Percent of Construction in 5+ Unit Structures

History Recent

4.The Baby Boomer

Sell-Off

Number of U.S. Homeowners by Age Cohort2000 and 2010

15-24 25-34 35-44 45-54 55-64 65-74 75-84 85+0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

14,000,000

16,000,000

18,000,000

20,000,000

Population Growth by Age GroupLast 20 Years and Next 20 Years

Source: Decennial Census and 2012 Census Bureau projections

Soaring Ratio of Seniors to Working Age

1970 1980 1990 2000 2010 2020 2030 20400

California

Seniors (65+) per 100 Working Age (25–64)

Immigrant Contributions

fore-cast

Source: Census Bureau 1850 to 2010, Pitkin-Myers 2011 U.S. Generational Projections

Cumulative Foreign-Born Share of U.S.

Changing Outlook on Immigration

Alternative Projections of Net Immigration to the U.S. (1000s)

1970 1980 1990 2000 2010 2020 2030 20400

CB 2012-middle

Pitkin-Myers 2011

CB 2008-middle

1980-90 1990-00 2000-10 2010-200.0

Renters

Owners

forecast

Growth of Immigrant Renters and Owners(Millions)

Dowell Myers, USC PriceSource: Dowell Myers and John Pitkin, “Immigrant Contributions to the Housing Market…” RIHA, Mortgage Bankers Association, 2013

Immigrant Trajectory From Renting to Owning

Percent Homeowners of Cohort that Arrived in the 1980s

1990 2000 2010 20200

Non- Hispanic

Hispanic

Source: Dowell Myers and John Pitkin, “Immigrant Contributions to the Housing Market…” RIHA, Mortgage Bankers Association, 2013

Transition into Homeownership

For Successive Waves of Immigrants in the U.S. Arriving Before 1970, 80, 90, 2000, or 2010

Data Source: Dowell Myers & Cathy Liu, Urban Policy and Research, September 2005; updated Hyojung Lee 2013 Dowell Myers, USC Price

70 80 90 00 100%

Total Native-born

Total Foreign-born

1960s Arrivals

1970s Arrivals

1980s Arrivals

1990s Arrivals

2000s Arrivals

Census Year

Transition into Homeownership

For Successive Waves of Immigrants in Major States Arriving Before 1970, 80, 90, 2000, or 2010

Data Source: Dowell Myers & Cathy Liu, Urban Policy and Research, September 2005; updated Hyojung Lee 2013 Dowell Myers, USC Price

70 80 90 00 100%

All Na-tive-born

All For-eign-born

1960s Arrivals

1970s Arrivals

1980s Arrivals

1990s Arrivals

2000s Arrivals

1980-90 1990-00 2000-10 2010-200

Immigrants

Native-Born

forecast

Growth in Number of RentersWho are Immigrant or Native-Born (Millions)

1980-90 1990-00 2000-10 2010-200

Immigrants

Native-Born

forecast

Growth in Number of OwnersWho are Immigrant or Native-Born (Millions)

1970-80 1980-90 1990-00 2000-10 2010-200

Renters

Owners

forecast

Immigrant Share of Growth

Renters and Owners

All Across America

Californ

ington

Nevada

Colorado

Arizona

Rest of W

OregonIlli

Minnesota

Rest of M

idwest

Michigan

DC Region

FloridaTexa

Georgia

North Caro

Rest of S

New York

New Jerse

Massach

usetts

Connecticu

Pennsylvania

Rest of N

ortheast

TOTAL U.S.

100%West Midwest South Northeast

Immigrant Share of Growth in Renters2010-2020

Immigrant Share of Growth in Owners2010-2020

Californ

Nevada

ington

Oregon

Arizona

Colorado

Rest of W

Illinois

Rest of M

idwest

Minnesota

Michigan

DC Region

FloridaTexa

Georgia

North Caro

Rest of S

New Jerse

New York

Massach

usetts

Connecticu

Pennsylvania

Rest of N

ortheast

TOTAL U.S.

100%West Midwest South Northeast

What is the New Normal?

Population Growth by Age GroupLast 20 Years and Next 20 Years

Source: Decennial Census and 2012 Census Bureau projections

Outlook for Household FormationsRecent History and Remainder of Decade

Source: Census Bureau Current Population Survey/Housing Vacancy Survey

History 2013 through 2019

Annual HH Formations (millions)

Trend in Homeownership?No Clue from This Short Span: 1995 to 2013

A Century of U.S. Homeownership Rates

1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 20200

Census

5-Year Cohort Progress Into HomeownershipPercent Homeowners, by Age at Beginning of Period

2007 20120.0

65-6960-6455-5950-5445-4940-4435-3930-3425-29

2000 20050.0

65-6960-6455-5950-5445-4940-4435-3930-3425-29

Before the Crash

AFTER the Crash

Source: Dowell Myers analysis of Housing Vacancy Survey data

Comparison of Progress into Homeownershipby Four Cohorts Observed in Same Age Intervals

25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69-5.0

Increment in Homeownership Rate by Cohortsin 5 Years After Beginning Date

Cohort Age at Beginning of 5 Year Period

Source: Dowell Myers analysis of Housing Vacancy Survey data

What are the Takeaways?

• Watch the ups and downs of demographic age waves

• The same for ups and downs of new immigrant arrivals

• Immigration + revived native demand = stronger outlook

• Beware the flood of aging sellers – we can plan solutions

• We must strengthen the younger generation, increasing their capacities, and removing barriers to their success

• Demographics help us to think ahead so that we can plan a better future for America

Thank you

For More Information on

Housing & Demographics

Visit USC PopDynamics

Dowell Myersdowell@usc.edu

Publications Referenced in this PresentationMyers, Dowell and John Pitkin, “Immigrant Contributions to Housing Demand in the United States: A Comparison of Recent Decades and Projections to 2020 for the States and Nation,” Special Report, Research Institute for Housing America, Mortgage Bankers Association, April 2013.

Pendall, Rolf, Lesley Freiman, Dowell Myers, and Selma Hepp, “Demographic Challenges and Opportunities for U.S. Housing Markets,” Bipartisan Policy Center, Washington, D.C., March 2012.

Pitkin, John and Dowell Myers, “Projections of the U.S. Population, 2010-2040, by Immigrant Generation and Foreign-Born Duration in the U.S.,” Special Report, Population Dynamics Research Group, October 2011.

Myers, Dowell and John Pitkin, “Demographic Forces and Turning Points in the American City, 1950 to 2040,” Annals of the American Academy of Political and Social Sciences 626 (November 2009): 91-111.

Myers, Dowell and SungHo Ryu, “Aging Baby Boomers and the Generational Housing Bubble: Foresight and Mitigation of an Epic Transition,” Journal of the American Planning Association 74, 1 (Winter 2008): 17-33. (Winner of 2008 Award for Best Article in the Journal.)

Myers, Dowell, Immigrants and Boomers: Forging a New Social Contract for the Future of America. New York: Russell Sage Foundation, 2007.

NOTE: most publications are available at http://www.usc.edu/schools/price/research/popdynamics/

Real Estate Voices California Association of Realtors, Nov. 13, 2013 Dowell Myers Demographic Waves...

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