How an Aging US Population Will Drive Home Prices Higher — PragCap

How an Aging US Population Will Drive Home Prices Higher

  • 10/24/2012

By Walter Kurtz, Sober Look

It is a well known fact that homeownership in the US has been on a decline, a trend that started even before the financial crisis. Now Moody’s predicts this trend will begin reversing next year.

Homeownership

Dotted curve is Moody’s projection (Source: Moody’s)

Their explanation has to do with demographics. Baby boomers are moving into the highest homeownership group by age, while “echo boomers” (children of baby boomers) are getting to the age at which they are significantly more likely to own a home than the younger age group.

Moodys: – Demographics will also generate much of the gain in homeownership over the next decade, with a growing share of households aging into the highest homeownership groups. Baby-boomers are aging into the 65 and older cohort, the age group with the highest homeownership rate, while echo boomers have entered the 30- to 45-year-old cohort, which traditionally makes the largest gains in homeownership.

Historical data tends to support this assumption. The jump in ownership from the 25-29 cohort to the 30-34 is the sharpest – which is where echo boomers are now transitioning.

Homeownership by age

Source: Moody’s

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