Sometimes they’re obvious. In Phoenix, lots of the REO properties have been sold. As a result, the inventory is tighter than it has been in several years – and that means prices are creeping up, and will be for a while.
Sometimes, though, they’re less obvious – but just as important.
One that I found the other day will be a big part of our business in the next 8-10 years. The Joint Center for Housing Studies at Harvard University is projecting that there will be an average of 1.18 million new households a year formed between now and 2020.
A combination of the recession and less immigration kept the numbers low, around 568,000 a year since 2007.
But they can’t stay low forever. You can’t break the laws of nature and economics, and both are working to create the next big period of household growth.
A new generation called the Echo Boomers –born between 1981 and 1990 – is coming into household-forming age. They’re the kids of the Baby Boomers, who created households in record numbers when they came of age in the late 1960s.
The kicker: There are 5 million more Echo Boomers getting ready to form households today than there were Baby Boomers in 1970. The numbers are pretty amazing.
As the economy picks up, we need to prepare for some serious demand from people looking to either to buy – usually at the entry level – or rent.
You’ve been warned. Get ready for 1.18 million new households a year.