What factors are fueling strong housing demand?

But even housing-industry executives —
typically an optimistic lot — were taken aback when the government reported
last week that home-building activity has
accelerated.

…All this building
raises a natural question: Why does the U.S. need so much new
housing?

…First and foremost, the
demand for housing reflects two key demographic trends — new household
formations and immigration. Economists at Harvard University’s Joint Center for
Housing Studies believe that household formations in the current decade will
outpace formations during the 1990s, when they estimate that 12.5 million
households were formed. Growth has been due in part to many Gen Xers
establishing households at younger ages than even their baby-boomer parents did.
Over the next 10 years, the Joint Center estimates that between 13.4 million and
14.5 million new households will be formed, depending on the level of
immigration.

It is no secret that home builders have
been putting up houses at a furious pace. But even housing-industry executives
— typically an optimistic lot — were taken aback when the government reported
last week that home-building activity has
accelerated.

All
this building raises a natural question: Why does the U.S. need so much new
housing?

The simple answer,
of course, is rising demand. But what is behind the demand is worth considering.
First and foremost, the demand for housing reflects two key demographic trends
— new household formations and immigration. Economists at Harvard University’s
Joint Center for Housing Studies believe that household formations in the
current decade will outpace formations during the 1990s, when they estimate that
12.5 million households were formed. Growth has been due in part to many Gen
Xers establishing households at younger ages than even their baby-boomer parents
did. Over the next 10 years, the Joint Center estimates that between 13.4
million and 14.5 million new households will be formed, depending on the level
of immigration.

From the
Realestatejournal .

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