Despite a slight stabilization of home building and home sales in spring 2009, home prices continue to fall and foreclosures continue to increase in most areas of the country, according to the recently released Harvard University Joint Center for Housing Studies report "The State of the Nation's Housing 2009."
Although home builders have severely curtailed housing starts and homes have become more affordable due to market pressures, several economic factors are keeping housing demand low, including job losses and tighter lending standards.
However, the study also finds that the stage is being set for a housing recovery and that demographic trends are building a foundation for future market strength.
Future housing demand will be driven, in part, by members of the "Echo Boom" (or Millennial) generation—which surpasses the Baby Boom generation in size—as they enter peak household-formation years.
Over the next 10 years and beyond, Echo Boomers will keep demand for starter homes and rental housing strong, according to the study. Retiring Baby Boomers also will boost demand for housing, but the type and value of homes they demand will depend on how fast they can recover from the recent loss of their personal wealth due to economic conditions—and how much wealth they can rebuild. Minorities will drive 73 percent of household growth from 2010 through 2020, increasing the minority share of households to 35 percent in 2020 (up from 29 percent in 2005). Hispanics will account for 36 percent of housing demand among minority groups.
"With the Echo Boomers driving demand for starter homes and apartments and the Baby Boomers powering demand for homes suited to older Americans, the design professions will be called upon to deploy new technologies and designs to meet the aesthetic tastes and functional needs of a new, more diverse younger generation on the one hand and a generation in need of home modifications to help them age more safely and healthfully in place on the other," Mohsen Mostafavi, dean of the Harvard University Graduate School of Design, said in a statement about the study.