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Age, Demographics, and the Demand for Housing, Revisited

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  • Richard K. Green
  • Hyojung Lee

Abstract

The United States is aging, and many baby boomers are reaching or will soon reach theretirement age of sixty-five. On the other hand, the Millennials, the largest generation in the U.S.history, has faced the problems of high rents relative to incomes and volatility in housing market.Given the shifts, we are again seeing growing debates about how these changes in age structurewill affect housing and labor markets.To address these concerns, we revisit Green and Hendershott (1996) and analyze the linksbetween the willingness to pay for a constant-quality house and demographics using the Census2000 and 2005-2011 American Community Survey 1-Year Public Use Microdata Sample data.The results generally reconfirm what Green and Hendershott (1996) found: The massivedemographic shift will not result in another housing crisis. This is because the educational andincome levels of the current and future seniors are relatively higher than before, leading them toconsume more than previous generations. Also, the size of the Millennial generation will drivethe growth of aggregate housing demand, although the growth of per household housing demandmay be relatively modest.

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  • Richard K. Green & Hyojung Lee, 2015. "Age, Demographics, and the Demand for Housing, Revisited," Working Paper 9473, USC Lusk Center for Real Estate.
    • Handle: RePEc:luk:wpaper:9473
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    Cited by:

    1. Xu, Hangtian & Zhou, Yiming, 2019. "Public housing provision and housing vacancies in Japan," Journal of the Japanese and International Economies, Elsevier, vol. 53(C), pages 1-1.
    2. Gong, Yifan & Yao, Yuxi, 2022. "Demographic changes and the housing market," Regional Science and Urban Economics, Elsevier, vol. 95(C).
    3. Said Benjamin Bonakdar & Michael Roos, 2023. "Dissimilarity effects on house prices: what is the value of similar neighbours?," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 18(1), pages 59-86, January.
    4. Shihong Zeng & Xinwei Zhang & Xiaowei Wang & Guowang Zeng, 2019. "Population Aging, Household Savings and Asset Prices: A Study Based on Urban Commercial Housing Prices," Sustainability, MDPI, vol. 11(11), pages 1-21, June.
    5. Fathali Firoozi & Abolhassan Jalilvand & Donald Lien & Mikiko Oliver, 2020. "The Impact of Population Aging on Housing Prices: A Comparative Study of Singapore and the U.S," International Real Estate Review, Global Social Science Institute, vol. 23(4), pages 467-482.
    6. Bonakdar, Said Benjamin & Roos, Michael W. M., 2021. "Dissimilarity effects on house prices: What is the value of similar neighbours?," Ruhr Economic Papers 894, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    7. Itzhak Ben-David & Pascal Towbin & Sebastian Weber, 2019. "Inferring Expectations from Observables: Evidence from the Housing Market," NBER Working Papers 25702, National Bureau of Economic Research, Inc.
    8. Yingchao Lin & Zhili Ma & Ke Zhao & Weiyan Hu & Jing Wei, 2018. "The Impact of Population Migration on Urban Housing Prices: Evidence from China’s Major Cities," Sustainability, MDPI, vol. 10(9), pages 1-14, September.
    9. Lu, Jiajun, 2020. "Household residential location choice in retirement: The role of climate amenities," Regional Science and Urban Economics, Elsevier, vol. 84(C).

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    More about this item

    Keywords

    Age; Cohort Effects; demographics; housing demand; Projections;
    All these keywords.

    JEL classification:

    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand

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