US demographic factors and the housing market

If you look at the US housing market a reasonable hypothesis is that the US has a Detroit style structural oversupply of housing units. Expectations that immigration and population growth are going to ensure the units will be absorbed may be misplaced. Indeed as the US economy worsens we may well see stagnant population levels as opposed to slow but steady increase.

There are several factors that point towards the possibility of a real oversupply but the interesting one is questioning the population growth rate in the US going forward. As unemployment swells the backlash against immigration will grow steadily. And many that immigrated who face difficulties will decide to move back with friends and family or return to their country of origin. Next  as jobs become uncertain people will delay having children and the birth rate will fall.

If one can conclude that population growth will probably be stagnant in the future the housing market will be stagnant at best.

Regarding illegal immigration, it’s doubtful that migrant flows are nearly what they were during the boom years or even still net positive.

In recent years the US population has been growing at 1% per year or 3 million people. There is evidence that a lot of people will be delaying having kids due to hard times.  Here is a chart created by Calculated Risk recently that shows a recent inflection point in births:

I think that the Detroit style oversupply is concentrated in Nichigan, FL AZ, and NV.  US Census shows that 17% of Florida’s  population was 65% or older. That’s a big chunk of housing occupancy that is going to go away permanently over time.

Here are the five states with the greatest proportion of residents 65 and over:

1        Florida:                 16.5 %
2       West Virginia:     15.0 %
3       Pennsylvania:     14.7 %
4       North Dakota:     14.1 %
5       Iowa:                       13.9 %


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