The recent slowdown in household growth was quite intriguing given that it corresponded with the coming of age of the millennials (born 1985–2004), the largest generation in history. Over the past 10 years, the number of adults under age 30 increased by roughly 5 million but the number of households in that age group rose by just 200,000. Indeed, if young adults headed households at the same rates that they did in 2005, there would be 1.7 million more households in this age group today. Over the next decade, however, the aging of the millennial generation will be a boon to household growth. Household headship rates rise from about 25 percent for adults in their early 20s to about 50 percent for those in their 30s. As they move further into these age groups, millennials are expected to form well over 2 million new households each year on average, raising their numbers from 16 million in 2015 to a projected 40 million in 2025. But for many young adults, low wealth remains an obstacle to home buying. In 2013, renters aged 25–34 had median net wealth of $4,850 and cash savings of $1,030, well below the down payment needed for today’s median-priced home. Renters aged 35–44 were not much better off, with median net wealth of $7,900 and cash savings of $510. Given the large discrepancy in wealth between owners and renters, the inability to access homeownership may further divide the haves and the have-nots. Growth in the adult population will support significant household growth over the next decade and beyond. Demographic forces alone will drive the addition of more than 13 million households in 2015–2025. Much of this growth will occur among the retirement-aged population, with the number of households age 70 and over projected to soar by over 8 million, or more than 40 percent. These increases will lift the share of older households from 16 percent in 2015 to about 21 percent in 2025. * Excerpted from Joint Center for Housing Studies of Harvard University
Posted in Property Profiles.