The Mortgage Bankers Association has published a new white paper tracing how demographic shifts since the financial crisis have impacted the housing market while assessing their implications for future market growth.
“Implications of a Persistent Slowing in Housing Demand” analyzes changes in household formation, housing construction, affordability, and population growth, and explores how slowing demographic growth may affect housing supply-demand balances, home prices, and mortgage market activity over the coming decade.
The report recalls how strong millennial household formation following the Great Recession contributed to housing demand that outpaced construction, resulting in rising home prices and rents and estimates of a national housing shortfall ranging from 1.5 million to 7.3 million units.
The report then traces ongoing demographic trends – including population aging, lower fertility rates, smaller younger adult cohorts, and reduced immigration – while forecasting a future where residential construction will create a supply that could outpace demand. Also considered is how slower housing demand growth could affect mortgage origination volumes, borrower equity accumulation, and credit performance.
The report is authored by Mike Fratantoni, MBA senior vice President and chief economist; Joel Kan, MBA vice president and deputy chief economist; Judie Ricks, MBA associate vice president of commercial real estate research; and Edward Seiler, executive director of the Research Institute for Housing America and MBA associate vice president of housing economics.
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