The State of the Nation's Housing: 2009

The bad news has been the worst economic recession since the 1930s. The good news is the housing market has been showing some signs of leading the nation out of that recession. A new report from Harvard University's Joint Center for Housing Studies is banking on demographics to bring back the battered housing market.

The uncertainty, though, lies in predicting the timing, speed and depth of a housing recovery that hinges on the reversal of so many variables-including rising unemployment, sinking home values, and tightening mortgage credit-and their impact on immigration trends and demand among younger home buyers.

The Echo Boomers are entering their peak household formation years of 25-44 with more than five million more members than the baby boomers had in the 1970s. The Echo Boom generation-which is five million people larger than the Baby Boomers-is believed to be high enough to drive the housing industry's growth "for the next 10 years." However, echo boomers "will likely enter the housing market with lower real incomes than people the same age did a decade ago," and therefore might be more open initially to rental housing and starter homes.

Meanwhile, as the leading edge of the baby-boom generation reaches age 65, demand for retirement housing will rise. Increased longevity among those born before World War II will also lift demand for assisted living facilities. How this demand is expressed will depend importantly on how much, and how quickly, these households can rebuild their recently decimated wealth.

The Harvard report has numerous charts and other data that hopefully will assist you and your clients find your Way Forward!