Spike in new households adds to rent, home price increases
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We’ll get data on what’s happening with housing prices when the S&P Corelogic Case-Shiller index comes out Tuesday.
One factor that’s been driving prices up in the last couple of years is a spike in the number of people forming households.
More people have been living alone in recent years too. As of 2020, they made up about 27% of households, according to new data from the Census Bureau. In 1940, it was less than 8%.
There are two main reasons the number of people living alone has risen.
“Part of the increase has been simply the fact that we’re getting older,” said Lisa Sturtevant at real estate listing service Bright MLS. “And as the older adult population increases, that’s a population where there’s more single households.”
Also, she said, more 20-, 30- and 40-year-olds are living alone because people are marrying later.
“While marriage is, of course, a story of love, it’s also a financial decision,” Sturtevant said. “That recession back in 2008 actually pushed back a lot of milestones for millennials, including marriage and childbearing.”
All of that means many have been living alone longer.
Laurie Goodman at the Urban Institute added that in the last couple of years, “You had a lot of new household formation.”
That includes kids moving out of their parents’ homes, people exiting roommate situations. She said both these trends have put pressure on the housing market.
“Obviously, new household formation needs a place to live. … That actually contributed a lot to the increase in home prices,” Goodman said.
And the increase in rents too.
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