Home >> Daily Dose >> Study: Household Formations Now at Pre-Recession Levels
Print This Post Print This Post

Study: Household Formations Now at Pre-Recession Levels

home-in-your-handsNew household formation in the United States has recovered from the widespread job losses that came with the recession, according to a new study from the Lusk Center for Real Estate at the University of Southern California.

The study was conducted authored by Gary Painter, director of the Lusk Center, and doctoral candidate Jung Hyun Choi, to determine how long declines in household formation would last following a major economic shock such as a drop in employment that occurred during the recession.

The study found that household formations consistently return to their previous levels in about three years regardless of whether employment has recovered at the same rate during that time.

"This shows us that even a permanent increase in the unemployment rate will not have a permanent impact on housing formation," Painter said. "As a result, policymakers and industry practitioners have a new level of predictability when it comes to how economic crises impact the rate of new households."

The researchers found in their study that household formations in the United States fell to almost zero during the recession's peak years of 2008 to 2010, but then played three years of catch-up and have now recovered to pre-recession levels of about one million per year. Quarterly data from 1975 to 2011 showed that household recoveries typically lasted three years following periods of unemployment.

"The freeze in formations is over and people are again moving out and forming households. This means that real estate professionals and policy makers should not keep waiting for pent-up demand," Painter said. "So while a number of factors will continue to influence the housing recovery, household formation is no longer one of them."

About Author: Seth Welborn

Seth Welborn is a Harding University graduate with a degree in English and a minor in writing. He is a contributing writer for MReport. An East Texas Native, he has studied abroad in Athens, Greece and works part-time as a photographer.
x

Check Also

Black Knight Announces Expansion of Property Tax Certifications

Other reports in the Eye of the Industry focus on the integration of credit reporting capabilities and a mortgage providers’ giveaways during the Holiday season.

GET THE NEWS YOU NEED, WHEN YOU NEED IT.

With daily content from MReport, you’ll never miss another important headline in originations, lending, or servicing. Subscribe to MDaily to begin receiving a complimentary daily email containing the top mortgage news and market information.