Depicting the current housing downturn in sobering terms, the 2009 "State of the Nation’s Housing" report released by Harvard University’s Joint Center for Housing Studies on June 22 nevertheless gives home builders firm assurances of a resurgence in demand once the eco-boom generation gains a footing in the housing market.
Born from 1981-2000, members of the eco-boom generation, Harvard says, will boost annual average household growth to more than 1.25 million during the decade of 2010-2020 — even under the worst of circumstances.
“While the economic crisis has dampened household growth, the sheer size of the echo-boom generation will give a powerful boost to long-run housing demand,” the report says.
However, “a severe and prolonged recession,” according to the housing economists at Harvard, could reduce immigration, which is a key driver of household growth.
Two household growth projections were made for this year’s report: one based on the latest population projection from the Census Bureau in which annual net immigration increases from 1.1 million in 2005 to 1.5 million in 2020, and more than 2.0 million by 2050; and one in which these immigration assumptions are cut by half as the result of a worse than expected recession.
Even under the weaker scenario, in which there would be 2.3 million fewer household formations in 2010-2020, average annual household growth can be expected to be comparable to the growth experienced from 1995-2005 as members of the echo-boom move into the prime household formation and home buying ages of 25 to 44.
“The number of echo boomers aged 25 to 44 will eclipse the number of baby boomers when they were those same ages by more than 5.9 million,” according to the report.
“With the number of households in this age group projected to increase between 2.0 million and 3.4 million, the demand for rentals and starter homes will surge,” the Joint Center says. “Meanwhile, with their longer life spans and sheer numbers relative to the preceding generation, the baby boomers will add dramatically to the number of households over 65. This will lift demand for retirement communities as well as services and home improvements that help seniors age in place.”

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