June 11, 2015

Generation Gap in Household Formations

Generation Gap in Household Formations

The total number of U.S. households with at least one member younger than 50 years old shrank between 2004 and 2014; at the same time, the number with at least one member between 50 and 75 grew. This pattern held true for black and non-Hispanic white households. On the other hand, except for a slight dip among Hispanic 24- to 29-year-olds, the number of Asian and Hispanic households rose across the board.

Check out the Mortgage Bankers Association's chart, Change in the Number of Households by Age, 2004-2014, based on U.S. Census Bureau data.

What's going on?

Among the reasons for losses:

  • Aging population; moves into higher age categories, with Generation Xers' and Millennials' attitudes and finances heavily affected by the recession
  • Unemployment, underemployment, and stagnant wages
  • Debt – student or otherwise
  • Suspended household formations
    • Household formations in the first half of the 2000s grew faster than in the benchmark year (2000). They've lagged significantly since then.
    • An estimated 3.9 million households that normally would have been formed during the years of the recession weren't formed.
    • Young adults (18- to 34-year-olds) account for almost 75% of these pent-up households.

And for gains:

  • Aging population; moves into higher age categories, with Baby Boomers now ranging from more than 50 to about 70 years old
  • Growing non-white populations
  • Immigration

Will losses ease up?  Time will tell.

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