Demand and Demographics

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Demand andDemographics
with Dowell Myers
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The Big Questions

• Did demographics cause the boom ...and also the
  bust?
• Perils of agingwho will save us?
• Gaining the Long View on turning pointswhats
  normal and what can we expect next?

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• Market Boom
• and Bust

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The Big Drivers

• More Buyers
• More people
• More income
• More investment incentive
• Shortage of Supply
• Delays in production
• Land constraints
• Ease of Financing

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Minority Dictatorship of New Construction
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Shillers 120 Year View of House Prices
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Closer View of Prices in 1970 to 2020
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Case-Shiller Prices by Metro Area
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• How Flexible
• is Demand?

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Demand Consumption RatesXNumber of
Peopleof Each Type
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Household Formation by Age Decade
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Home Ownership by Age Decade
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Home Ownership by Age Decade
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Paradox of Ownership Trends and PriceAge 25-34
1990s
1980s
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• The Two Drivers
• Aging and
• Immigration

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Demographic GrowthNative-Born Turning Age 25
Plus Immigrant Arrivals
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?
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56 million still kicking in 2030
Dowell Myers 2009
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Population Growth in the US (Age 25)by Major
Segment Each Decade
Myers 09
Source Statistical Abstract 2003, Tables No. 12
and HS-3.
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The Baby Boomers Surge Forward
Age Group Increase as Percent of US Population at
End of Each Decade
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Percent of U.S. Population Newly Immigratedin
Preceding 10 Years
Homer Hoyt 1940 Predicted urban decline
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Foreign-Born Share of the Growth in Homeowners

• California U.S.
• 1980s -- 11
• 1990s 74 21
• 2000s 73 28
• 2010s 90 ?? 30

Dowell Myers 2009
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Soaring Immigrant Homeownership For Each
Immigrant Wave Arriving Before 1970, 80, 90, 2000
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
70
80
90
00
United States
Data Source Dowell Myers Cathy Liu, Urban
Policy and Research, September 2005
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Change in Homeownership For Successive Waves of
Immigrants ArrivingBefore 1970, 1980, 1990, or
2000
0.8
0.8
0.8
0.7
0.7
0.7
0.6
0.6
0.6
0.5
0.5
0.5
0.4
0.4
0.4
0.3
0.3
0.3
0.2
0.2
0.2
0.1
0.1
0.1
0
0
0
70
80
90
00
70
80
90
00
70
80
90
00
IL
NY
TX
Data Source Dowell Myers Cathy Liu, Urban
Policy and Research, September 2005
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• Turning Pointsin Citiesand Housing

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Episodes in the Urban Condition

• 1. Urban Decline Abandonment (1950-80)
• 2. Gentrification, the Long Boom the
  Affordability Crisis (1970-2008)
• 3. Collapse of Apartment Construction
  (1990-2005)
• Urban Revival the Apartment Rebound
  (20062020)
• 4. Baby Boomer Sell-Off Ripple Effects .
  (2015-2040)

Source Dowell Myers and John Pitkin (2009)
Annals, AAPSS
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Apartment Trend and Outlook
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Century of Multifamily Construction Shares
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place holder
Share of Housing Construction in Apartments

• Price series

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Age Profile of Tenants in Recently Built
Apartments
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Growth at Ages 25-34 as a Percent of US Population
Baby Bust Hits Young Adult Age
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Expressed Preference for a Townhouse in the City
Myers and Gearin 2001 based on NAHB data
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• The Baby Boomer Sell-Off

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Average Annual Rates of Buying and Selling
Per 100 People of Each Age in California
Buy
Buyers and Sellers per 100 Population
Sell
Age
Source Myers (2007) Immigrants and Boomers,
Figure 11.1
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Growing Weight of Seniors Compared to Working Age
Seniors (65) Per 100 Working Age
67 after 2010
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Annual Net Selling Rate at Age 65-69
Myers and Ryu 08
Source Dowell Myers and SungHo Ryu, Aging Baby
Boomers and the Generational Housing Bubble,
Journal of the American Planning Association
(winter 2008)
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Will Supply Cut Back?
Annual Home Sales in Millions
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Annual Growth in Homeowners by Age Group
Myers and Pitkin 08
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Myerss Projection for California in 2020
Whos Going to Buy Your House?
Net buyers
Hispanic Asian and Pacific Islander
Black Non-Hispanic White
Number of Buyers Less Sellers
Net sellers
Source Immigrants and Boomers, Figure 11.3
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Need for Bulking Up the Younger Generation
67 Heavier Senior Ratio of Home Sellers
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• Solution
• Bulk them up
• with education
• Everyone a College Grad
• and a Home Buyer

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Compared to High School Grads,Latino College
Grads Pay Higher House Prices

• 64 higher

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The Intergenerational Social Contract Investing
in Future Workers Home Buyers
Children Educational Investments

Replacement Supporters New Workers New
Home Buyers New Taxpayers

Seniors Rewarded Pensions Health Care Home Sales



Mature Adults Make Maximum Financial
Contributions
Dowell Myers University of Southern California
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Conclusions for the
Future
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What Conclusions for the Future?

• Homebuying will slump without investment
  incentive, but a quick, deep decline gets back to
  normal faster.
• Density rules Apartments have both demographics
  and postponed buyers feeding their demand. Plus
  Baby Boomer retirees love those townhomes.
• But Baby Boomers will bring us too many old
  folks. We need to prepare all of the young to
  help carry the load. Start cultivating future
  home buyers now.
• And immigrants can help fill the gap.

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Thank You
Dowell Myers ltdowell_at_usc.edugt For more
information search for popdynamics