Age, Demographics, and the Demand for Housing, Revisited

48 Pages Posted: 7 Jun 2015

See all articles by Richard K. Green

Richard K. Green

University of Southern California - Lusk Center for Real Estate

Hyojung Lee

University of Southern California - Lusk Center for Real Estate

Date Written: June 4, 2015

Abstract

The United States is aging, and many baby boomers are reaching or will soon reach the retirement age of sixty-five. On the other hand, the Millennials, the biggest generation in the U.S. history, has been experiencing the issues of rental affordability and uncertainty in housing market. Given the shifts, we are again seeing growing debates about how these changes in age structure will affect our housing and labor market.

To address the concerns, we revisit Green and Hendershott (1996) and analyze the links between the willingness to pay for a constant-quality house and demographics using the Census 2000 and 2005-2011 American Community Survey 1-Year Public Use Microdata Sample data. The results generally reconfirm what Green and Hendershott (1996) found: The massive demographic shift will not result in another housing crisis. This is because the educational and income levels of the current and future seniors are relatively higher than before, leading them to consume more than previous generations. Also, the size of the Millennial generation will drive the growth of aggregate housing demand, although the growth of per household housing demand may be relatively modest.

Keywords: Age, Cohort Effects, Demographics, Housing Demand, Projections

JEL Classification: R21, E37, R23

Suggested Citation

Green, Richard K. and Lee, Hyojung, Age, Demographics, and the Demand for Housing, Revisited (June 4, 2015). Available at SSRN: https://ssrn.com/abstract=2614638 or http://dx.doi.org/10.2139/ssrn.2614638

Richard K. Green (Contact Author)

University of Southern California - Lusk Center for Real Estate ( email )

2250 Alcazar Street
Los Angeles, CA 90089
United States

Hyojung Lee

University of Southern California - Lusk Center for Real Estate ( email )

CA
United States
(323)719-0605 (Phone)

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