Economic Forecast Predicts Slower Growth
February 13, 2020 - At the Economic Forecast Breakfast event, hosted by the Construction Association of Michigan and the Home Builders Association of Southeastern Michigan and attended by 250+ industry professionals, keynote speaker Robert Dietz, PhD, presented evidence to support his theory that the residential home building market is still expanding, however, the market growth rate will begin to slow. He notes that while the economy is slowing, risk of recession remains low.
Based on population growth and anticipated ages at which millennials will move out of their family homes, the demand for single family housing is still strong but the decision to buy is coming later in life. About 45% of boomers, those born between 1946-1964, were purchasing their first home between the ages of 25 and 34. In contrast, only about 37% of millennials, born between 1981-1997, are purchasing at that same age.
According to the Berkeley Economic Review, 85 percent of baby boomers that currently own 32 million homes express no interest in selling in the near future. While baby boomers own nearly $13.5 trillion in homes, millennials are delaying becoming homeowners in part due to housing shortages and subsequent housing affordability.
However, lumber prices are relatively low, interest rates are holding steady, consumer confidence is up, the labor shortage seems to be improving, and Gen Z, born between 1998-2013, are showing signs of a more traditional outlook for career goals and desire to own a home.
Robert Dietz, Ph.D., is Chief Economist for the National Association of Home Builders (NAHB), where his responsibilities include housing market analysis, forecasting and industry surveys, and housing policy research. Prior to joining NAHB in 2005, Robert worked as an economist for the Congressional Joint Committee on Taxation. He has testified before Congress on housing, economic and tax issues. He is a leading expert on home construction analysis and trends and has been cited and appeared on CNBC, the Wall Street Journal, and other news media. Robert is a native of Dayton, Ohio and earned a Ph.D. in Economics from the Ohio State University in 2003.