Friday, October 10, 2014

Some data on households & housing

Commenter "Glenn" had some input on this post.  He motivated me to check up on some Census data.  I thought what I found was interesting enough to include on a bonus weekend post.

Here is a graph of vacancies:

I think this shows a bit more of a weak supply / strong demand signal than Glenn does.

But, then I looked up household size, which I hadn't looked at for a while.

I would have expected a sizeable hump from this recession, due to the tremendous drop in new home production.  There was a hump in 2009 and a small bump up in 2013.  But, I can't say that there is an obvious deviation from trend.  In fact, I think this is a data point against my (on hold) bullish call on homebuilders.  The decline in household size has added significant housing demand in the past few decades.  Between the probable minimum level that is likely close to the current level, which should prevent further falls in average household size, and a population pyramid that probably points to more growing households over the next couple of decades than shrinking households, this should flatten out, which might be another reason to expect somewhat lower home demand than we have seen in the recent past.  Baby boomers are mostly already in "empty nest" phase, and their children are still early in family-building phase.

At this link, there is a graph of household formation that is updated monthly.  It shows household formation regaining momentum after a weak 2013.

This is a fun graph, as there is fodder here for any framing.  The rise in homeownership could be attributed to baby boomer lifecycles, but the trend suspiciously turns sharply in 1994, when interstate banking expansion was tied to CRA incentives.  But, homeownership leveled off before the steepest part of the home price/rent ratio run up.  P/R bottomed out back at 1990's levels, which seems about right to housing bubble folks.  But it is still below the ratio of the late 1970's, when real rates were previously low, but nominal rates were in the double digits, which confirms the bias of a housing bull like me.

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