From Crisis to Transition Demographic trends and American housing futures, with lessons from Texas Rolf Pendall, Ph.D. The Urban Institute Presentation to the Bipartisan Housing Commission, San Antonio, 3/6/2012
Overview The near-term policy challenge: Demographic trends from housing crisis to housing recovery The longer-term policy challenge: The Baby Boomer to Echo Boomer transition Lessons from Texas: Unique environment, ahead of the pack, behind the curve
Part I. Near-term challenges DEMOGRAPHICS FROM CRISIS TO RECOVERY 3
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 FHFA House Price Index, USA (1995=100) US house prices down 18% from peak 225 200 175 150 125 100 75 50 Source: Repeat-sales data indexed by the Federal Housing Finance Agency, all transactions index through 2011Q4
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Homeownership rate index (2000 = 100) Homeownership rose 2000-2006, 5 fell from 2006 to 2011 115 110 105 100 95 Hispanic Non-Hispanic White Black 90 85 Second-quarter estimate Source: U.S. Census Current Population Survey/Housing Vacancy Survey, Series H-111
Percentage point change in homeownership African American homeownership fell especially sharply 6 5% 4% 3% 2% 1% 0% -1% -2% -3% -4% -5% -6% 1990s 2000s 15-24 25-34 35-44 45-54 55-64 65-74 75-84 85+ Age group Source: 1990, 2000, and 2010 U.S. Census 100% count data.
Percent change in median net worth Whites Asians Hispanics Blacks Blacks, Hispanics lost most of their wealth in the crash 7 Median net worth Thousands $180 $160 $140 $120 $100 $80 $60 $40 $20 $0 2005 2009 0-10 -20-30 -40-50 -60-70 Source: Data from Rakesh Kochhar, Richard Fry, and Paul Taylor. 2011. Wealth Gaps Rise to Record Highs Between Whites, Blacks, Hispanics: Twenty-to-One. Pew Research Center, page 15. Graphics by Pendall and Freiman.
Linking the economic and housing crisis to demography The housing crisis persists, even as the economy shows signs of recovery The crisis has slowed the pace of demographic transitions, including Homeownership Household formation, marriage, and childbearing It s too early to tell how soon, and how much, these life-course transitions will recover
Scenarios for household and homeownership growth, 2010-2030 9 Weak Medium Strong Weak recovery Medium recovery Strong recovery Suppressed household formation trends (parallel to 2000s) Average trends in household formation (1990s, 2000s) Robust household formation trends (parallel to 1990s) Weak transitions to homeownership (parallel to 2000s) Medium transitions to homeownership (average of 1990s, 2000s) Strong transitions to homeownership (parallel to 1990s) All scenarios assume constant immigration at 975,000 net new immigrants per year
Net annual increase in households (000) Annual household growth, Observed + 3 scenarios, 1990-2030 10 1,600 1,400 1,200 1,371 Observed 1,124 1,230 1,486 Scenarios 1,346 1,000 800 600 972 579 951 Weak Medium Strong 400 200 0 1990-2000 2000-2010 2010-2020 2020-2030 Source: 1990, 2000, and 2010 U.S. Census 100% Count; Urban Institute projection scenarios.
Annual growth in households (000) Rental demand probably stronger 600 2010-2020, abating thereafter Observed 507 500 Scenarios 589 543 549 483 463 11 400 300 200 100 0 378 1990-2000 2000-2010 2010-2020 2020-2030 306 Weak Medium Strong Source: 1990, 2000, and 2010 U.S. Census 100% Count; Urban Institute projection scenarios.
Demography should influence policy; Policy will also shape demography Housing policy will contribute to economic recovery And affect household formation and homeownership Housing policy will directly influence individual and household decisions Household formation Homeownership 12
Part II. Longer-Term Challenges MANAGING THE BABY-BOOM TO ECHO-BOOM TRANSITION 13
Millions of senior-headed households A growing 65+ population needs affordable, accessible dwellings now 14 40 35 30 25 20 15 10 5 0 34 27 17 20 12 9 5 6 2000 2010 2020* 2030* Senior owners Senior renters *Assumes Urban Institute medium projection scenario. Low and high scenarios differ modestly. 2000 and 2010 are from U.S. Census 100% count.
Millions of dwellings released Seniors will contribute increasingly to 15 16.0 14.0 12.0 10.0 8.0 6.0 4.0 2.0 0.0 2.4 housing supply 1.9 1.9 7.9 8.7 9.0 3.0 11.6 1990-2000 2000-2010 2010-2020* 2020-2030* Homeowners Renters *Assumes Urban Institute medium projection scenario. Low and high scenarios differ modestly. 2000 and 2010 are from U.S. Census 100% count.
Echo boomers represent long-term opportunity 16 Educational attainment by generation, at ages between 18 and 28 Depression-WW2 Born 1930-45 Baby Boom Born 1946-64 19 25 9 13 15 23 6 11 Some college 4+ years college Gen-X Born 1965-79 33 13 37 15 Echo Boom Born 1980-95 34 15 40 20 0 20 40 60 Percent of men 0 20 40 60 Percent of women Source: Pew Research Center
but they struggle in the economic crisis 30 25 20 15 10 5 0 Unemployment by age 16-19 yrs 20-24 yrs Source: Bureau of Labor Statistics 60 50 40 30 20 10 0 Percent reporting trouble in last year obtaining medical care, paying for housing, or been laid off 54 49 48 20 18-29 30-49 50-64 65+ Age Source: Pew Research Center
Change in households Millions Most new households from 2010 to 2020 will be Echo Boomers 18 30 25 20 15 10 5 0-5 -10-15 Weak Medium Strong Weak Medium Strong Source: Urban Institute projection scenarios. 2010-2020 2020-2030 55+* Others Echo boomers Born 1975-95 *Age at beginning of decade
Change in owner-occupied units Millions Echo Boomers are critical for homeownership recovery 19 30 25 20 15 10 5 0-5 -10-15 2010-2020 2020-2030 Weak Medium Strong Weak Medium Strong Source: Urban Institute projection scenarios. Others Echo boomers 55+* *Age at beginning of decade
The Baby-Boom to Echo-Boom Transition: Potential mismatches? The national picture: Echo-boomer demand will more than consume baby-boomer-supply But mismatch between supply and demand may develop: By housing type: large single-family houses supplied, small affordable units needed Geographically: Baby Boomers live everywhere, Echo Boomers concentrate in the Sunbelt 20
Geographic divides are already emerging in the senior to young adult homeownership transition
Part III. Texas demographics and housing markets A DIFFERENT STORY, AHEAD OF THE CURVE, AND BEHIND THE PACK ALL AT ONCE 22
Texas not hard-hit by foreclosure
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 FHFA House Price Index (1995=100) Major TX metros housing prices didn t 225 sink much in the crash 200 175 150 125 100 75 50 USA Houston San Antonio Dallas Source: Repeat-sales data indexed by the Federal Housing Finance Agency, all transactions index through 2011Q4
80% 70% Homeownership high in Texas, especially San Antonio (2010) San Antonio All TX metros All US metros 60% 50% 40% 30% 20% 10% 0% Overall rate White non- Hispanic Source: 2010 US Census, SF1, Table QT-H1 Black non- Hispanic Hispanic
Percent of employment (2009) Texas economy buoyed by oil & gas San Antonio also depends on gov t employment 10% 9% San Antonio All Texas metros USA metros 8% 7% 6% 5% 4% 3% 2% 1% 0% Mining Construction Manufacturing Fed. Civil. Military Local Source: US Bureau of Economic Analysis Regional Data, Table CA25N
Texas Challenges Fast population and household growth 9.4 million people under 25; 800K in San Antonio High domestic and international immigration Affordability Over 80% of lower income renters overpay; over 30% of owners Access to opportunity 25% of Texas kids live below the poverty line; 1.1 million live in high-poverty neighborhoods Assisted housing too often built in high-poverty neighborhoods Substandard housing persists, especially in rural Texas
Conclusions: What Texas suggests for national housing policy Texas shows us new American households Racially, ethnically diverse; immigrants & their kids National policy can support affordable rental and homeownership options Texas reflects inequities that national housing policy can help address Access to opportunity; exposure to risk and hazards National policy can support equal opportunity