New Households Mean Greater Demand

Household formation -- one of the primary drivers of any housing market -- is on a major upswing in the U.S., according to an interesting news article posted yesterday by Bloomberg.

The story, "New Households Form at Fastest Rate Since '07 in Resurgent U.S," reports that more and more young people are moving out of their parents' homes and are either buying or renting their own. That's a significant change from the past few years, when household formation dropped to alarmingly low levels.

Experts cited in the article predict that between 750,000 and 1 million new households will be created this year. For comparison, only 357,000 were formed in the 12-month period from March 2009 to March 2010.

The annual average over the past 10 years is about 1.3 million new households, so the recent growth spells a return to a more normal rate. That's important, because new households create demand, especially at lower prices levels, and provide an upward push to the entire market.

As employment comes back and the economy continues to stabilize, we'll see an even greater rate of young people moving out. Why? A 22-year-old from Tennessee sums it up pretty well:

"I love my parents, but I didn't want to live with them anymore." Some things never change.

It's great to see the media noticing some of the more positive signs out there. Another example: "It's Time to Buy Again," a March 28 Fortune magazine article that was featured last month on RE/MAX Mainstreet. Let's hope consumers are seeing these signs too.

If you come across encouraging news items -- or articles of interest that perhaps aren't so -- encouraging please send them my way at dave@remax.net and I'll share them on Mainstreet. Also, are you seeing hints of recovery in your area? Send in a comment and let people know.

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