Today, in the Calculated Risk Real Estate Newsletter: Lawler: Likely “Dramatic shift” in Household Formation has “Major implications” for 2023
A brief excerpt: Below is a chart showing the CPS/ASEC estimates of the % of 25-34 year olds living alone.
According to CPS/ASEC estimates, the % of adults (18+) living alone jumped to 14.9% in March 2022 from 14.4% in March 2021, and the % of households with just one member climbed to 28.9% from 28.2%. Both “living alone” measures (share of population and share of households) were at the highest levels ever recorded by the CPS/ASEC. The jump in one-person households was the major reason why the average household size as measured by the CPS/ASEC plunged to 2.50 in March 2022 (the lowest ever recorded) from 2.54 in March 2021. (Unrounded the average household size fell by .0341). In terms of share of total households, the one-person share increased the most for young adults (up to 39 years) and for 65-74 year olds. …
… there is strong reason to believe that household growth is no longer getting the “boost” from behavioral changes as that suggested from March 2021 to March 2021. If that turns out to be true, then household growth is or will return back to growth more consistent with underlying population changes by age group, a development that would imply household growth over the next year of about half that apparently experienced from early 2021 to early 2022. Such a dramatic shift has major implications for projections of rent growth and home price growth next year.There is much more in the article. You can subscribe at https://calculatedrisk.substack.com/