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Myers MFE2009

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USC Demographer Dowell Myers presents a demographic forecast for the multifamily industry at MFE2009

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Myers MFE2009

  1. 1. Demand and Demographics with Dowell Myers
  2. 2. The Big Questions <ul><li>Did demographics cause the boom ...and also the bust? </li></ul><ul><li>Perils of aging—who will save us? </li></ul><ul><li>Gaining the Long View on turning points: what’s “normal” and what can we expect next? </li></ul>
  3. 3. Market Boom and Bust
  4. 4. The Big Drivers <ul><li>More Buyers </li></ul><ul><li>More people </li></ul><ul><li>More income </li></ul><ul><li>More investment incentive </li></ul><ul><li>Shortage of Supply </li></ul><ul><li>Delays in production </li></ul><ul><li>Land constraints </li></ul><ul><li>Ease of Financing </li></ul>
  5. 5. Minority Dictatorship of New Construction Everyone else lives in existing housing 1% of households (growing segments) dictate type of new construction
  6. 6. Shiller’s 120 Year View of House Prices
  7. 7. Closer View of Prices in 1970 to 2020
  8. 8. Case-Shiller Prices by Metro Area
  9. 9. How Flexible is Demand?
  10. 10. Demand = Consumption Rates X Number of People of Each Type
  11. 11. Household Formation by Age & Decade
  12. 12. Home Ownership by Age & Decade
  13. 13. Home Ownership by Age & Decade
  14. 14. Paradox of Ownership Trends and Price Age 25-34 1980s 1990s
  15. 15. The Two Drivers: Aging and Immigration
  16. 16. Demographic Growth Native-Born Turning Age 25 Plus Immigrant Arrivals Myers and Pitkin ‘09
  17. 19. …… ?
  18. 20. 56 million still kicking in 2030 Dowell Myers 2009
  19. 21. Population Growth in the US (Age 25+) by Major Segment Each Decade Source: Statistical Abstract 2003, Tables No. 12 and HS-3. Myers ‘09
  20. 22. Age Group Increase as Percent of US Population at End of Each Decade The Baby Boomers Surge Forward
  21. 23. Percent of U.S. Population Newly Immigrated in Preceding 10 Years Homer Hoyt 1940 Predicted urban decline
  22. 24. <ul><li>California U.S. </li></ul><ul><li>1980s -- 11% </li></ul><ul><li>1990s 74% 21% </li></ul><ul><li>2000s 73% 28% </li></ul><ul><li>2010s 90% ?? 30% </li></ul>Foreign-Born Share of the Growth in Homeowners Dowell Myers 2009
  23. 25. Soaring Immigrant Homeownership For Each Immigrant Wave Arriving Before 1970, 80, 90, 2000 United States Data Source: Dowell Myers & Cathy Liu, Urban Policy and Research , September 2005 0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 70 80 90 00 All Native- born All Foreign- born 1960s Arrivals 1970s Arrivals 1980s Arrivals 1990s Arrivals
  24. 26. Change in Homeownership For Successive Waves of Immigrants Arriving Before 1970, 1980, 1990, or 2000 NY 0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 70 80 90 00 TX 0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 70 80 90 00 Data Source: Dowell Myers & Cathy Liu, Urban Policy and Research , September 2005 IL 0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 70 80 90 00 CA 0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 70 80 90 00 FL 0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 70 80 90 00 0.8
  25. 27. Turning Points in Cities and Housing
  26. 28. Episodes in the Urban Condition <ul><li>1. Urban Decline & Abandonment (1950-80) </li></ul><ul><li>2. Gentrification, the Long Boom & the Affordability Crisis (1970-2008) </li></ul><ul><li>3. Collapse of Apartment Construction (1990-2005) </li></ul><ul><li>Urban Revival & the Apartment Rebound (2006~2020) </li></ul><ul><li>4. Baby Boomer Sell-Off & Ripple Effects …. (2015-2040) </li></ul>Source: Dowell Myers and John Pitkin (2009) Annals, AAPSS
  27. 29. Apartment Trend and Outlook
  28. 30. Century of Multifamily Construction Shares
  29. 31. place holder Price series Share of Housing Construction in Apartments
  30. 32. Age Profile of Tenants in Recently Built Apartments
  31. 33. Baby Bust Hits Young Adult Age Growth at Ages 25-34 as a Percent of US Population
  32. 34. Myers and Gearin 2001 based on NAHB data Expressed Preference for a Townhouse in the City
  33. 35. The Baby Boomer Sell-Off
  34. 36. Source: Myers (2007) Immigrants and Boomers , Figure 11.1 Buyers and Sellers per 100 Population Age Per 100 People of Each Age in California Buy Sell Average Annual Rates of Buying and Selling
  35. 37. Seniors (65+) Per 100 Working Age +67% after 2010 Growing Weight of Seniors Compared to Working Age
  36. 38. 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) Myers and Ryu ‘08
  37. 39. Will Supply Cut Back? Annual Home Sales in Millions
  38. 40. Myers and Pitkin ‘08 Annual Growth in Homeowners by Age Group
  39. 41. Myers’s Projection for California in 2020 Who’s Going to Buy Your House? Source: Immigrants and Boomers , Figure 11.3 Number of Buyers Less Sellers <ul><ul><li>Hispanic </li></ul></ul><ul><ul><li>Asian and Pacific Islander </li></ul></ul><ul><ul><li>Black </li></ul></ul><ul><ul><li>Non-Hispanic White </li></ul></ul>Net buyers Net sellers
  40. 42. Need for Bulking Up the Younger Generation 67% Heavier Senior Ratio of Home Sellers
  41. 43. Solution: Bulk them up with education… Everyone a College Grad … and a Home Buyer
  42. 44. <ul><li>… 64% higher </li></ul>Compared to High School Grads, Latino College Grads Pay Higher House Prices…
  43. 45. The Intergenerational Social Contract Investing in Future Workers & Home Buyers Children Educational Investments Seniors Rewarded Pensions Health Care Home Sales $$ $$ $$ Dowell Myers University of Southern California Replacement Supporters New Workers New Home Buyers New Taxpayers Mature Adults Make Maximum Financial Contributions $$ the cycle of roles
  44. 46. Conclusions for the Future
  45. 48. What Conclusions for the Future? <ul><li>Homebuying will slump without investment incentive, but a quick, deep decline gets back to normal faster. </li></ul><ul><li>Density rules: Apartments have both demographics and postponed buyers feeding their demand. Plus Baby Boomer retirees love those townhomes. </li></ul><ul><li>But Baby Boomers will bring us too many old folks. We need to prepare all of the young to help carry the load. Start cultivating future home buyers now. </li></ul><ul><li>And immigrants can help fill the gap. </li></ul>
  46. 49. Thank You Dowell Myers <dowell@usc.edu> For more information search for “popdynamics”

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