PodcastDemographics

Shifting Foundations: A Deep Dive into Demographics and Housing

Dean Wehrli

Dean Wehrli

May 10, 2024

I hesitate to write “demographics is destiny” here because that has been done to death. Just because something is a cliché, though, doesn’t mean it’s not true. Demographics impact housing in a few massive foundational ways and a thousand small ways. Price, product, place—demographics help define them.

On the latest episode of the New Home Insights Podcast, my guests are Chris Porter and Eric Finnigan, two leaders at John Burns Research and Consulting who live and breathe demographics and what they mean for housing

Featured guests

Chris Porter, SVP and Chief Demographer, JBREC

Eric Finnigan, VP of Demographics Research, JBREC

Is there a reason that ‘demographics is destiny’ has become a cliché?

  • Eric, Chris, and JBREC do demographics a bit differently than most. Instead of 20ish-year generations, they think in 10-year cohorts. This method helps us understand how societal and economic impacts have shaped the various cohorts and influenced their housing choices and prospects.
 
  • We can think of a new household formation as a new unit of housing demand. Over the next 10 years, core factors like growth rates and “headship rate” (don’t worry, they’ll explain) should lead to about 1.4 million new households per year. Add another half-million to that through second-home demand. Then consider that nearly one-quarter of a million homes become unlivable in any given year, and you’re talking about real money.
 
  • The US housing market is badly undersupplied because we have not consistently built anything like that number of homes in a given year in a very long time. That pushes home prices. As a result, affordability often dampens realized household formation. In a sense, affordability kicks demand down the road.

So, where is the growth going?

  • The growth is in younger and older cohorts, forming that familiar barbell effect that defines current demographics in the US.
 
  • People live longer and live more independently much later in life. What does this mean for senior housing, for independent living, and for care facilities?
 
  • Younger households denied a toehold in the for-sale sector are renting. However, even their price attainability can dampen new household formation. What does this mean for for-sale vs. for-rent demand? What kind of homes and apartments will we build and where? (I can’t just tell you everything here; you’ll have to listen to the podcast.)
 
  • Price pushes more people to the peripheries of many metro areas, sure, but it also pushes housing densities upward, and not just in urban locales. That “surban” solution—denser options in suburban areas—remains a potential growth sector.

What impact is immigration having?

  • Immigration ground to a halt with Covid but has surged since. Though it’s getting better, the ability to process these folks has overwhelmed the system. While immigrants are here, they can work and rent, increasing housing demand nationwide.
 
  • With natural growth waning as the population ages and younger cohorts having kids later, immigration has become a huge part of the nation’s growth.
 
  • While this trend is growing the overall labor force, it is not helping the builder labor pool since the deficit is mainly in the skilled trades.

How is remote work holding up?

  • Remote work has held on more tenaciously than many thought it would or than many corporate managers hoped since they miss all those brilliant innovations stemming from serendipitous water cooler conversations. These include…(cue sound of crickets or, if you are in the eastern half of the country, cicadas).
 
  • Despite return-to-office policies, remote work remains about four times more prevalent than pre-Covid. Eric tells us that the resulting outflow to more outlying areas is akin to the massive shifts caused by the car revolution of the 1950s and 1960s that opened up the first ring of suburbia.

We provide demographic clarity for executives and decision makers.

The new US Demographics Insights and Strategies report delivers demographic insights every quarter to support strategic decisions in your business, including recommendations for every residential sector.

Available to clients in our research portal and on Burns Interactive Dashboards. Not a client but want to access demographics insights every quarter? Contact us here.

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About The Author

Dean Wehrli
Dean Wehrli
Principal
Dean helps housing sector clients figure out not just what might work and what might not, but why.

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