![]() ![]() ![]() While the rate of new household formation will eventually fall, the volume of houses put back on the market by seniors will steadily increase.įor example, the share of central Indiana homeowners age 55 or higher in 2021 was nearly 50%, up from 36% just 20 earlier. In Marion County from 2019 to 2021, a 2.0% annual rate of new household formation more than doubled the 0.8% average rate witnessed from 2013 to 2019 - despite a population decline in Marion County since the beginning of the pandemic.Ī rate of new household formation that is greater than the rate of total population growth, though, cannot be demographically sustained, they said. Recently elevated demand for homes in central Indiana is real and persistent. Falling fertility rates mean post-millennial generations will be smaller.” “The current bubble in demand generated by millennials will slowly deflate, as baby boomers downsize their living space and age out of the housing market. This implies continued strain on supply in the next several years followed by long-run erosion in demand that can only be reversed by high levels of immigration. “At present, demographic pressure on housing markets is at its peak. “Demographic variables will become as important as interest rates, income growth and construction costs in determining the return on real estate assets,” Powell and Kinghorn wrote. In their article, “Prepare for a Generational Housing Bubble,” Phil Powell, clinical associate professor of business economics, and Matt Kinghorn, senior demographer at the Indiana Business Research Center, said residential real estate demand is driven in part by population. “New housing built now to meet strong demand may sit vacant in a decade. “Plainly put, a generational housing bubble is on the horizon,” the authors said in Kelley Real Estate Outlook, a new research publication from the Indiana Business Research Center and the IU Center for Real Estate Studies. While demand from millennials in Indiana and elsewhere has put pressure on housing markets in recent years, don’t expect that trend to continue, according to a new report from the Indiana University Kelley School of Business. ![]()
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