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Immigrants are key to long-term U.S. housing health, researcher says
The rising average age of U.S. immigrants will spur the long-term recovery of the housing market, according to Gary Painter, director of research at the University of Southern California’s Lusk Center for Real Estate. As new Americans grow older and begin to invest in housing they increase both demand and the number of households in the U.S., but in the short-run this demographic is also decreasing the number of household per person.
The number of heads of households in the market is a key indicator of housing demand. During recessions and periods of high unemployment people increasingly share households or delay moving out, decreasing the number of households and therefore demand.
Since 2008, Painter found that there has been an approximately 6 percent increase in the number of people sharing households. As a result, the rate of new households formed annually has dropped to well under 1 percent — a number that had increased 1 or 2 percent every year since 2000.
However, historical models show that sharing households within immigrant communities is a short term phenomenon that will stabilize and return to traditional levels, even when the job market is weak, according to Painter.
“Due to these demographic shifts, housing demand will come back, even if the job market remains weak. While there’s little evidence that national homeownership rates will rise in the short-term, the maturing of the immigrant population supports a much better long-term outlook,” Painter said. –Christopher Cameron