Liniger: 'New Households Signal Upswing'

Liniger: 'New Households Signal Upswing'

In a recent blog post, Dave Liniger points to good news in the media regarding household formation and its positive impact on housing.

The RE/MAX Chairman and Co-Founder references a recent Bloomberg news article that discusses how household formation -- one of the main drivers of any house market -- is on a "major upswing."

Here's an excerpt from his post:

The story, "New Households Form at Fastest Rate Since '07 in Resurgent U.S," reports that more and more young people are moving out of their parents' homes and are either buying or renting their own. That's a significant change from the past few years, when household formation dropped to alarmingly low levels.

Experts cited in the article predict that between 750,000 and 1 million new households will be created this year. For comparison, only 357,000 were formed in the 12-month period from March 2009 to March 2010.

The annual average over the past 10 years is about 1.3 million new households, so the recent growth spells a return to a more normal rate. That's important, because new households create demand, especially at lower prices levels, and provide an upward push to the entire market.

As employment comes back and the economy continues to stabilize, we'll see an even greater rate of young people moving out. Why? A 22-year-old from Tennessee sums it up pretty well:

"I love my parents, but I didn't want to live with them anymore." Some things never change.

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