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1
Return to Normal?
Assessing Housing Demand Before and
After the Crash

• Dowell MyersSchool of Policy, Planning, and
  Development

2
The Big Questions

• What are the long term demographics underlying
  Boom and Crash of housing demand?
• After the current downturn, who will lead our
  recovery?

3
Particular Questions

• How might the long passage of the Baby Boomers
  through their housing life cycle have contributed
  to this history of housing expansion?
• What happens when slow, gradual demographic
  trends are punctuated by economic contraction and
  expansion?
• What happens now?

4
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5
How to Measure Housing Demand?

• Supply Outcomes
• Building permits for
• new construction
• The Balance of Supply Demand
• Vacancy rates
• Inventory time on the market
• Prices

Consumer Behavior Sales traffic--looking Actual
sales Underlying Demand Pressure Job
growth Population growth Human
capital Homeownership rates Buy and sell
rates Credit--fuels everything else
Expectations
6
Tsunami
RidingThe Baby Boomer
7
Adult Population Growth Each Decade, 1960 to 2030
Source Dowell Myers, USC
8
Balance Tilts to Seniorsvs. Working Age
Seniors (65) Per 100 Working Age
67 after 2010
Source Dowell Myers, USC
9
Percent Rise in Senior Ratio in Next Two Decades,
by State
Source Dowell Myers, USC
10
The Trigger of Many Crises

• Social Security Crisis
• Medicare/Health Insurance Crisis
• Workforce Replacement Crisis
• Taxpayer Replacement Crisis
• Infrastructure Crisis
• The Home Seller Crisis

11
Likely Responses in Next Two Decades.

• Reduced growth in GDP
• Delayed retirement by seniors
• Reduced or delayed senior benefits
• Higher taxes
• Rediscovery of neglected minority youth
• Greater reliance on immigrant workers

12

• How has the housing market been riding this wave?

13
Growth by
Age Group
14
Minority Dictatorship of New Construction
Everyone else living In existing housing
Households who dictatetype of new construction
Dowell Myers USC School of Policy, Planning, and
Development
15
Millions of Population Growth, by Age Group and
Decade
16
Homeownership Rates by Age Group
17
Components of the Changing Homeownership Rate
18
Married Couple Homeownership Rates at Three Ages
19
Single Mens Homeownership Rates at Three Ages
20
Single Womens Homeownership Rates at Three Ages
21
Declining Percentage of Married Couples
22
End of Education IncreasesHigh School Completion
Source Jennifer Cheeseman Day and Kurt J.
Bauman, Have We Reached the Top? Educational
Attainment Projections of the U.S. Population,
Working Paper 43, Population Division, Census
Bureau, May 2000.
23
End of Education IncreasesCollege Completion
Source Jennifer Cheeseman Day and Kurt J.
Bauman, Have We Reached the Top? Educational
Attainment Projections of the U.S. Population,
Working Paper 43, Population Division, Census
Bureau, May 2000.
24
by State
Age Group Increases in Homeownership
25

• Expectations
• The paradox of rising affordability

26
Correlation of Ownership Trends with PricesAge
25-34
1980s
1980s
27
Average Annual Rates of Buying and Selling
Per 100 People of Each Age in California
Buy
Buyers and Sellers per 100 Population
Sell
Source Immigrants and Boomers, Figure 11.1
Age
28
Annual Net Selling Rate at Age 65-69
Source Dowell Myers and SungHo Ryu, Aging Baby
Boomers and the Generational Housing Bubble,
Journal of the American Planning Association
(winter 2008)
29
Future Projections
Past Trends and
30
Increases in Homeowners by Age Group
31
Will Supply Cut Back?
Annual Home Sales in Millions
32
Comparison of Expected to Sales Data
millions
33
Minority Dictatorship of New Construction
Everyone else living In existing housing
Households who dictatetype of new construction
Dowell Myers USC School of Policy, Planning, and
Development
34
Millions of Population Growth, by Age Group and
Decade
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Two to the Rescue
37
The Rediscovery of Hopeabout Immigration and
the Future
38
Foreign-Born Shares of Growth in Number of
Homeowners

• 1980s 11
• 1990s 21
• 2000s 38
• 2010s 70 ??
• 2020s 100 ??

39
Soaring Homeownership For Each Immigrant Wave
Arriving Before 1970, 80, 90, 2000
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
Data Source Dowell Myers Cathy Liu, Urban
Policy and Research, September 2005
70
80
90
00
United States
40
Change in Homeownership For Successive Waves of
Immigrants ArrivingBefore 1970, 1980, 1990, or
2000
0.8
0.8
0.8
0.7
0.7
0.7
0.6
0.6
0.6
0.5
0.5
0.5
0.4
0.4
0.4
0.3
0.3
0.3
0.2
0.2
0.2
0.1
0.1
0.1
0
0
0
70
80
90
00
70
80
90
00
70
80
90
00
IL
NY
TX
Data Source Dowell Myers Cathy Liu, Urban
Policy and Research, September 2005
41
Percent Who Are Homeowners Among Latino
Immigrants in California

• New Arrivals under 5
• After 20 years 51
• After 30 years 64

42
Five Most Common Surnamesin California
Transactions

Source DataQuick
43
Need for Buffing Up the Younger Generation
67 Heavier Senior Ratio of Home Sellers
44
Median Value for Owner-Occupied Housing Units in
2000 and 2005
500,000
450,000
West
Midwest
South
Northeast
400,000
350,000
2000
300,000
2005
250,000
200,000
150,000
100,000
50,000
0
Iowa
Utah
Ohio
Delaware
Idaho
Texas
Maine
Alaska
Illinois
Hawaii
Nevada
Oregon
Indiana
Kansas
Florida
Arizona
Virginia
Georgia
Vermont
Montana
Missouri
Alabama
Colorado
Wyoming
Michigan
Nebraska
South Dakota
Kentucky
Arkansas
Maryland
New York
California
Wisconsin
Tennessee
Louisiana
Minnesota
Oklahoma
Washington
Mississippi
New Jersey
Connecticut
New Hampshire
New Mexico
West Virginia
Rhode Island
Pennsylvania
North Dakota
Massachusetts
North Carolina
South Carolina
District of Columbia
Source Doris Lei, University of Southern
California
45
The Rising Generational Hurdle 2005 vs. 2000
Median House Value to Median Income of Age 30-34
HI
9.00
CA
7.00
Price Multiple in 2005
5.00
3.00
Source Dowell Myers 2000 Census and 2005
American Community Survey
1.00
1.00
3.00
5.00
7.00
9.00
Price Multiple in 2000
46
Myers Projection for California in 2020
Whos Going to Buy Your House?
Net buyers
Hispanic Asian and Pacific Islander
Black Non-Hispanic White
Number of Buyers Less Sellers
Net sellers
Source Immigrants and Boomers, Figure 11.3
47
Buff Them Up with College Ed.Everyone a
College Grad
Solution
48
Compared to High School Grads,Latino College
Grads Pay Higher House Prices

• 64 higher

49
Two to the Rescue
50
Immigrant Home BuyersA Strengthened Younger
Generation of Buyers
51
Thank You

• For more information
• Google popdynamics
• Dowell Myers
• School of Policy, Planning,
• and Development
• University of Southern California

2007 Thomas Znanecki Award