Harvard Household Growth Rate thru 2035

THE SELF STORAGE REPORT — EPISODE TRANSCRIPT Episode: Harvard Household Growth Rate thru 2035 Guest: Dan — housing researcher, Harvard Joint Center for Housing Studies; David — seminar moderator, Harvard Joint Center for Housing Studies Host: Chris Berg — Abernathey Development Recorded: September 19, 2025 Video: https://www.youtube.com/watch?v=eTH-f0lhlJY Key topics: US household growth projected to slow to 8.6 million over 10 years (6.9 million under low immigration); natural population increase turning negative by 2038; net immigration of 850,000-900,000 a year; 3 home ownership rate scenarios (constant, average trajectory +0.8 points, low trajectory -1.6 points); 98% of household growth from households of color; households 80 and over doubling in 20 years; millennials 2.5 points below Gen X at the same age; homeowner growth of 337,000 a year under the low scenario; renter growth of just over 500,000 a year versus 174,000 under the high scenario; surge in 35-to-44-year-old renters; multifamily starts rebounding while single-family starts fall; Jon Spader and Chris Herbert's 2016 work on financial versus demographic drivers; Chris Berg on Lennar and D.R. Horton shrinking home footprints, the SSA Las Vegas millennial storage data, and the self storage tailwind Note: Speaker attribution reconstructed from raw captions. Light cleanup of transcription errors only; wording preserved. Timestamps and YouTube chapter markers removed. Turns marked [attribution inferred] could not be attributed with certainty. ————————————————————————————— Dan: household growth projections uh call for a significant slowdown in household growth. So this is the context that these tenure projections are going in. They're in the context of a general slowdown uh in overall household growth. Um and that slowdown is due really to a decline in the underlying population growth that really drives our household growth projections. and that that you know systematic decline that we're seeing in in future population growth, you know, has the potential being hastened by a downturn in immigration. So that's that's kind of the the latest thinking. But, you know, as for the, you know, as for the tenure projections themselves, um we see that the the the slowdown in household growth will be reflected across both, you know, homeowner and renter household growth. um you know the best case scenario in terms of you know in in terms of homeowner growth is like the high end the high uh projection for home ownership gives us homeowner household growth that's about historically average. Um and you know the low home ownership rate projection gives us you know the highest rental demand and that rental demand the highest scenario for rental demand is about historically average. That means at worst, you know, homeowner renter demand will set new record lows really again because it's within the context of this decline in overall household growth. So the pie is getting smaller and so however that that that pie is being being split, it will it you know on the low end it will be historically low levels of growth either for homeowner or renter demand. um you know the the the the current state of housing affordability for home buyers and current trends really suggests you know that the lower home ownership rate scenario that I'm about to present seems to be you know the most likely um but we'll talk through that um there's a because there's just a high level of variability in these projections um high level variability in these projections and um we'll go through the kind of levels of uncertainty that that are involved in them. So like I said, you know, the first thing we need to understand in looking at the h the these 10-year projections is the overall scenario. So I want to talk a little bit at first about the household projections that we put out in January. What are these household projections? So our household projections uh really give us a give us an estimate for the number of households overall in year 2035 and 2045. Um there the the numbers are available by age and race and ethnicity and also by household type. So we can get to see so in other words the number of of households uh in 2035 and 2045. So we get household growth by age and race and ethnicity and adapt it to a sense of what what sort of household types these involve whether it's a lot of single person households um you know family households or the like. So we can get a sense for what the overall demand level is on these dimensions. Uh it's a demographic the household projections are demographically driven projections. They start uh with the population projections from the census bureau um which provides population growth by 5-year age groups and and race and ethnicity groups that we use as kind of a basis uh for our household projections. So we have the population projections a whole grid of numbers we apply to that grid of future population the likelihood of each person heading an individual household. So it's the headship rate. So how many households uh will this future population support? Um and so taking the population growth applying a household headship rate we translate population growth into household growth and that gives us our household population by age and race and ethnicity um in 2035. the findings, the major finding of that we, you know, of running through this exercise and and creating our our household uh projections is that household growth is set to uh decline rather substantially over the next 10 years and even further over the next 20 years. So here we're highlighting um 2 of the 3 household growth household growth projections. We had a high, middle, and low projection. We're emphasizing here uh the middle and the low projection uh based on our understanding of an an expectation for uh for future levels of immigration uh which are the difference between the high, middle and low. So we're looking at the the middle level immigration projection for the future and the low level of immigration projection for the future. So all said what that means is the the rate of growth in households we're expecting the number of households to grow by about 8.6 million over the next 10 years under this main middle um projection. And you can see here that's substantially lower than what we've seen over the last few decades. Um and you know even lower still for the low immigration projection of about 6.9 million over the next 10 years. Um and lower still even for the 2035 to 2045. So this this whole context of slowing of uh household growth over the next decades behind that as I said population growth is really the driving force of our household growth projections. And so the slowdown in household growth in our projections is really being driven by the slowdown in the underlying population growth levels that we get from the Census Bureau's population projection. So here again we're highlighting the the middle and low immigration projections uh which show significant declines um in in population growth over the next 10 years and then even further in the next 20 years. What's driving the decline in population growth? And that's really uh declines in the natural increase which is the the the natural change in the population as a combination of births versus deaths. So here we see on the left the overall uh rate of population growth in orange really declining declining declining following what we see in these purple bars as a slowing of natural growth. So births births slowing deaths increasing fast more quickly than births. Um and so we see natural growth in the population turning negative actually. So where the number of deaths outnumbers the number of births by 2038. Um and so we can see uh how uh the overall population growth even when natural growth turns negative overall population growth still remains positive. you know almost almost about 800,000 and that's due to an estimate of future immigration. That's where immigration comes in. So we see here that immigration is staving off even more rapid declines in population growth because this underlying forces demographic forces of an aging population is really you know pulling down uh population growth. So our tenure projections utilize this main uh projection for immigration uh which gains favor uh when we look historically at historical levels of immigration. Um the main the main the population projection that underlies our main series household projections uh calls for about you know between 850 and 900,000 uh net new immigrants uh coming into the country every year for for the next 20 years. And that's we can see here that's in line with what we saw in the 90s 2000s 2010s. So that brings brings some favor. The other the other um uh reason you know that that that benefit using the main series is is according to the CBO immigration estimates 800 900,000 is about the level we can expect uh for annual increases in um in in the legal permanent residents every year. So, it's, you know, it's it's excluding um, you know, that that's the number that the CBO puts out for immigration when you exclude uh border crossings and and other other sources of immigrants. So, that's not to say immigration couldn't be lower. And so, we still have our our low immigration projection there, which is about half of the mean rate, but um, our tenure projections go on the middle series projection. So, keep that in mind. So we have a declining you know so bottom line declining pace of of household growth. The projections also show you know some other big trends we see in our in our household projections is significant increase in older adult households. Households 80 and over doubling over the next 20 years but significant growth. We also see growth in um you know millennials pushing up growth in households headed by people in their 40s and 50s over the next 10 years. Yikes. Millennials in their 50s. So um you know that has implications for home ownership rates rates as well. Uh other things we see in our household projections is uh significant amounts of growth from um from households of color. Uh over the next 10 years we see 98% of the growth in households projected to be from uh from black, Hispanic, Asian, and all you know all other race households. And we apply house household types onto our projections. We see the aging in the population. Large numbers of single person and married without children. Empty nester households. We can see a big growth in those mainly due to increases in older households that are single person households or or married without children. We also see a significant growth in the number of married house households with children married and and unmarried largely due to the increase in households um in their 40s and 50s. Um so that's that that's the quick run through of the household growth projection. slowdown in household growth, increasing growth increasingly dependent on immigration, increasingly diverse sources of growth, racially diverse, ethnically diverse, uh, and significant growth in older adult and middle-aged households. All of these trends have implications for home ownership rates in the future. But really in order to understand the impact of on home ownership rates and future, you know, understand future demand for homeowner and renter households, we've really have to run this to ground a bit more than we can get from just overlaying, you know, a simple overlay on the projections. And so that's why we have we a whole paper that we just released on our household tenure projections. So what are the tenure projections? similar theory there. You can see you'll you'll see similar ways in which it it kind of parallels the methodologies in the way we put together the um the household projections. But what do we have? We have you know what what do these tenure projections do? They project home ownership rates first and then the number of homeowner renter households in the US in 10 years. Um by age we get we get we will get these numbers in 10 year age groups. So it gives us 6 categories and um by race and ethnicity. Uh quick on the methodology, it's it's a demographically driven projection of home ownership rates, which means um you know household growth and changes in in race and age uh distributions are really what's driving this and not uh you know finance you know financial changes, economic changes. So that we'll talk about that. That's that's that's one big caveat to these projections is that they're demographically driven. Um, and so they they really are are playing off of our household projections. So what do we do? We start with the household projections for 2035. Uh, and we apply to them assumptions for home ownership rates by 10 by age and race. Um, and that gives us the number of homeowner households by age and race that we can sum up. And so to look at this a little bit more, you know, more technically kind of a visual of it. So we have our grid, you know, we have our household projections by age and race. Gives us a number of households in each of those categories. We have to come up with we we come up with an assumed home ownership rate within those categories. Multiply them together. We get homeowner households by category. Sum that up. We get a total homeowner households in 2035. Divide that by the total number of households. get a total US home ownership rate and it also allows us once we get that we can get the change in homeowner and renter households over the next 10 years. So that's a little look into little peak into the Excel files behind this uh calculation. Um but what are those how do we come up with those estimates for what home ownership rates are going to be in 10 years? And we have 3 scenarios that I'll talk through with you right now. Um, in the results, here's a quick look at the results here, but we have one scenario that really shows home rates staying stable, one with rates going up by a little less than a percentage point, and one where they are declining by a percentage point and a half. So, modest changes in these demographically driven uh scenarios. So, what's scenario 1? Scenario 1, we assume simply it's our it's the most simple estimate we can have. It's our baseline estimate. We assume home ownership rates remain constant by age and race. So we just assume that today's home ownership rates in each age and race group will be the same in 10 years. And so that any change in the home ownership rate, the number of homeowner households is due to changes in the size and the distribution of population by age and race. Uh so in this in this scenario, aging of the population lifts home ownership rates because home ownership rates for older adults are generally higher. Um we can see how uh on the left here, home ownership rates of 75 people 75 and over are well above average. And so when we look on the right, we apply, you know, consider consider this distribution of home ownership rates with where household growth has come from and how most of the household growth is coming from house an increase in households in this high home ownership age group. Aging is going to be an upward force on the overall US home ownership rate. At the same time, uh there was also we saw in the in the in the projections increased uh uh growth. Um most of the growth was uh from households of color. Um and that is a downward force on home ownership rates due to this these persistent and large gaps uh between races and ethnicities in home ownership rates. And so here we see the difference in the racial racial gaps in home ownership rates by age. In this respect, this the 98% of household growth uh you know coming from households of color is really a downward force as more households are in these lower home ownership rate uh groups as you know as long as these uh home ownership rate gaps persist. So we have aging the population lifting home ownership rates higher uh increased diversity pushing home ownership rates down the net sum is actually zero that it actually we actually see these 2 when you look at the total home ownership rates here's a look on the left of current and projected on our base case home ownership rates by age we see that all in the forces lifting home ownership forces of aging lifting home ownership rates are really uh equaled by the forces of increased diversity pushing them down so that the actual US home ownership rate under this scenario stays constant. uh getting into, you know, is it thinking ahead at our second scenario, is it plausible, let's think about scenario 1, is it plausible to assume home ownership rates by age and race will remain constant over the next 10 years? It's not as static a situation as you would think because it assumes home ownership rates of younger cohorts rise enough over the 10 years to match the rates of people 10 years older than them. So a 20-year-old today would have to have gain home ownership rates at the rate in order to match the home ownership rates of 30 year olds today. Uh but current rates are uh current rates across cohorts across age groups are generally below rates of their predecessors, the rates that the predecessors had 10 years ago. So anyway, holding holding rates constant would mean today's younger cohorts would need to catch up uh to match current rates of of older cohorts. Let me just do a quick stop in the jargon. So cohort, what do I mean by cohort? It's like a generation similar to a generation but smaller. It's a birth cohort. It's a in in terms of this paper, it's a group of householders. there's a cohort group of householders uh that are in the same 10-year age group born in the same same 10-year period. So, for example, a cohort of households aged 25 to 34 in 2025 who will be 35 to 44 in 2035. So, in 10 years, so following a cohort. What's a trajectory? A trajectory is the path that a home ownership rates experienced by a cohort over time as they age. So when we think of say we think of people who are 65 to 74 today, how did they get to the home ownership rates that they have? So instead of you know so looking back in time we can we can see how when they were younger their home ownership rates were lower but you have a certain increase in home ownership rates a general increase in home ownership rates a trajectory of increase uh for a cohort as they age. So we can see home ownership rates for a cohort generally start rise fast through young adulthood and they they the the increases kind of moderate. And so what so how does this play into our our our thoughts on uh on home ownership rates today? Well, I said earlier that uh you know our our base case is assuming that uh cohorts younger cohorts today are able to match cohorts 10 years older than them in 10 years in order to keep constant home rates by age and race. Here's a look at home ownership rates of 2 cohorts right now and then their histories. And so we can see how this millennial cohort, this is actually a 5-year cohort, their home ownership rate is about 2.5 percentage points below where Gen X was at the same age. So this millennial group is 34 years old, uh, their home ownership rates a little over 50%, but we can see how when this Gen X cohort was that age, they had higher home rates. So, in order to match the Gen X cohort's home ownership rate in 10 years, the home ownership rate of this millennial cohort will have to increase not not only increase as much as Gen X did because if they only increased as much as the Gen X cohort of next geners, they would still be below, but they'd have to catch up and then hit uh, you know, catch up to the to that Gen X home ownership rate. Similarly, Gen X themselves, their home ownership rates are lower than baby boomer home ownership rates had. So here we see the the Gen X cohort about 49 years old. Um today their their home ownership rate below where this baby boomer cohort's home ownership rate was when they were 49 years old. And so baby boomers would have to or the Gen X would have to catch up in terms of home ownership rate. So, so all this is to say what if if we're not if what is an what what sort of increase in home ownership rates can we expect for today's cohorts over the next 10 years as they age? And so this makes us go back and we look at the history of the data and say okay let's look at all the all the cohorts in these ages by a um and and what was the kind of increase in home ownership rate that they encountered as they went from age say 15 to 24 to age 25 to 34 or what's an average increase in home ownership rates over the next 10 years to expect for a 25 to 34 year old cohort as they move to be 35 to 44 year olds. So what we did is we calculated all these and got kind of an average increase in in home ownership rates as these cohorts age through a certain age groups. So we have a minimum maximum average. Let's look at you know we we we thought what is it what what would be the first you know the most the most direct assumption for today's home ownership rates and and we started with our scenario 2 where we just assume say today's today's uh today's households have an average increase in home ownership a historically average increase in home ownership as they age and that became our scenario 2 and that scenario actually resulted in a slight increase in the overall all home ownership rate. And here's the result um of home ownership rates in 10 years by age. And we see, you know, we see overall we see a to that total increase um you know, of about 0.8 percentage points. But but generally we see an increase the biggest increase we see by just simply assuming average uh you know trajectory of home ownership rates um is is a is a big increase in home ownership rates for 25 to 34 year olds kind of really signaling how home ownership rates for that group are are are low currently. Uh but for the other the other older age groups we also we actually see slight declines. So the average increase would still result in a slight down you know down um downturns in home ownership rates in each of these age groups. Um but then we thought so we have 2 scenarios so far. We have the base case where we just hold home rates by age and race constant. We have a a a trajectory scenario. We just in where we assume households have a an average historically average gains in home ownership rate as they age over the next 10 years. Then we were thinking is it a valid assumption that gains in home ownership rates for say 20 year olds or to to 30 or 30 year olds to getting 40 will they have an average experience uh in in um obtaining home ownership rate home ownership over the next 10 years um you know for because home ownership rates home ownership buying a home is is so expensive. So here we see um you know when we apply home prices to current interest rates uh and first typical first-time home buyer uh terms uh for getting a mortgage we could see the income you need uh in order to buy the median price home in the US is is sky-high right now right so so that's you know that's a a big barrier um we're in also we also See, we're looking at home ownership rates themselves. Uh, you know, the barriers to entry to home ownership being so expensive is actually pulling down home ownership rates and it's pulling down growth in the number of homeowners. So, here we see the bar um the bar is showing the year-over-year growth in the number of homeowner households really uh dropping uh as of late um enough to pull down home ownership rates. So, this leads to believe this isn't going to be an average. were not in kind of an average uh scenario for obtaining home ownership. So we came up with a different scenario. So this is our third scenario, scenario 3, where younger cohorts being so you know being having seeing such barriers to home ownership, they see below average rate of increases uh as they age over the next 10 years. So, so the the the 3 points I want to note on this is this this scenario assumes cohorts under the age of 35 currently uh see see the historically lowest increases in home ownership as they age. So um home home you know households aged 25 to 35 will see that minimum increase as they age next 10 years to being 35 to 45. Uh at the same time uh it doesn't assume the low trajectory for everybody. For the older households, it assumes they're going to go as average just because um the assumption is that most of these households uh are in home ownership already. Um so we apply just the average trajectory to to the households uh the older set of of households. Um but then again for these some of the low trajectories were extremely low and so we limited the downside. So if the low trajectory resulted in a historically low home ownership rate for this group in 10 years, we kind of capped that. We we made it so that the home ownership rate the resulting projected home ownership rate for each of these groups um could not be lower than the lowest ever recorded rate. So here's kind of a a look at what these some of these trajectories look like for just a certain the 25 to 35 year old uh or 25 to 34 year old age group. Um we see the average trajectory uh historically the historically average trajectory in the base case leading to a similar trajectory as the average trajectory. So um you know similar similar increases actually in this group under the base case uh and the average trajectory but we see the historically lowest rate um the historically lowest rate kind of it's oh the labels the label's missing but the historically lowest rate for these groups are shown in this yellow dot and so this red line here is showing the lowest applying the lowest ever trajectory um uh for for home ownership rates for each of these group historically um coming in well below the historically lower rate. So, a lot of these a lot of these groups are actually capped and so the home ownership rates in 2035 are the lowest ever rates for a lot of these groups uh in our scenario 3, our low home ownership rate scenario, but could be lower if it's not a valid assumption to assume rates don't go below the the lowest historic uh rate ever. So, so that's that's cohort or that's that's scenario number 3. And so to to look at this um you know by age the resulting home ownership rates by age it results in a 1.6 percentage point decline in the overall home ownership rate uh and some pretty substantial declines in the young the home ownership rates for households 45 and under due to applying the you know applying the low trajectory of of of uh home ownership rate increases to this group these groups. So there's there's our our look at the the 3 home ownership uh rate scenarios. Now it's time to say what kind of you know what what sort of growth in homeowner and renter households did these scenarios result in. And like I said going in, the best case scenario for home ownership rates or for homeowner household growth and renter household growth, the best the largest the best case growth scenarios were for growth to equal the average growth uh since 2020. So here we see how the average uh the average trajectory or the a the average trajectory um scenario results in uh future growth in homeowner households that was about equal to uh the historical average. Our base case scenario results in growth in homeowner houses about 18% below the historic average. So our base case um does call for a slight decrease uh in the in annual growth in homeowner households. And then we see this the the low trajectory home ownership uh scenario resulting in growth that's over ha you know about half less than half of the average growth in homeowner households is 337,000 increase in house in homeowner households per year over this low trajectory scenario. So pretty big pretty big decline um in homeowner household growth. How does this look by age? Um you know comparing the scenarios you see the change here is like no matter what the scenario uh growth in the number of older adult homeowners is set to be substantial not affected by our different different scenarios much. Um but the one thing that does change uh understandably is growth in home owner in homeowner households in their 20s and 30s um that that's that we applied the low trajectory. So we see you know compared to the a average trajectory we see growth in in the number of homeowner households in their 20s 30s and 40s actually turning negative uh under this low trajectory scenario. So um and and by age we see you know uh base and average scenario um showing growth across uh race and ethnicity groups. Uh the only real difference is the low trajectory scenario uh growth in in white households uh turning negative. What does what is what does it look like for renter household growth under our 3 scenarios? uh very similar just kind of in reverse of the homeowner household growth. So we have the the low home ownership rate trajectory scenario resulting in the highest renter household growth over the next 10 years. And that level of growth is similar to the average growth in renter households uh since 2000. So about a little over 500,000 renter households a year. That's a that's a substantial amount because it has been a pretty um you know pretty strong uh period of growth for renter households since since 2000. So uh that's what you get from the low home ownership rate trajectory scenario. But the other 2 scenarios, significant reductions in levels of growth for for for renter households, you know, with the the lowest growth uh in the highest the high home ownership rate scenario where uh that would result in less than 200,000 174,000 increase annual increase in renter households per year over the next the next 10 years. So um average at best and in the base case and the high home ownership rate case very low levels of of of renter growth. Uh how does this look by age? How can we compare the growth by growth in renter households by age across the scenarios? Uh biggest thing to note here again we see the 75 and over group you know a large part of renter household growth over the next 10 years under all scenarios but uh big thing to point out here is this the sharp growth in renter households in 35 to 44 under the low home ownership rate trajectory scenario. So significant growth in these in these, you know, middle-aged but younger younger households really kind of showing that impact of of the lack of access to home ownership rate. These are these are kind of the the traditional first-time home buyer age groups. And so we see this low home ownership low trajectory scenario for home ownership resulting in pretty significant growth in this this age group of renters over the next next 10 years. um you know the low trajectory scenario growth in in renter households will come across races and in in ages. The the difference being the average and base scenarios uh result in a in a decline in in white uh renter households. Um but under the low home ownership rate scenario, renter household growth will span each of these races and ethnicities. So, I think circling around um really the bottom line, you know, we have these 10-year projections. We hope they're useful as a way to think about um you know, viable uh um you know, plausible uh movements in the home ownership rate and the the resulting demand in rent homeowner and renter households. really gave us a sense uh for the magnitude of changes to to expect. Um but you know running down this list here really the bottom line is all of these you know all of these scenarios come within the context of slowing household growth. So that was the number 1 factor. we have this, you know, the the this lower overall growth in households really pulling down growth in homeowner and renter households and the extent to which they pull down this growth uh depends on our you know our our assumptions for home ownership rates. Um and you know I just wanted to end on that I said earlier these you know these are really these projections are really based on demographics. They're based on applying home ownership rates to different, you know, households by age and race and how movements in in household the household uh composition by age and race um you know really drive changes in the home ownership rates. But that's a big caveat in in the history. Um, you know, I can't leave without pointing to this, you know, this amazing chart from uh the 2016 uh look at uh you know, drivers of home ownership rate changes by uh my former colleague Jon Spader and Chris Herbert really showing that you know that it's not you know times of demographics really here's the bottom line in times where fin you know finan the financial environment is stable demographics do a pretty good job in uh in projecting changes in home ownership rates, but when you have a a mortgage boom or a mortgage meltdown or changes in finances, changes in the economy, those far outweigh any sort of change any sort of demographic uh impact um on on home ownership rates. So this is not to say that these these projections being demographically, you know, our current projections are demographically driven. That's not to say that they're not to be believed or not to be um trusted, but the fact that they uh they are a good baseline uh with the big assumption that financial circumstances uh are stable. uh and changes to financial circumstances, changes to ability to access home ownership such as a big drop in in interest rates, changes to um you know, mortgage uh credit access. Um you know, financial circumstances could change this. But absent those changes, you know, the changing demographics give us a good baseline uh for what to expect the the underlying drivers of of of home ownership. uh to do to to do. So I think with that I will open it up to questions and um circle back to circle back to David. David: Dan, thank you. There's there's so much going on here. Um really uh uh terrific and wide ranging um set set of set of questions. Um, and as I said earlier, we will only be able to get to to at least some of them. Um, and also to remind folks, a couple folks had asked that that we will be posting both the video and the slides. Uh, and I also left in the chat um a link to the to the full paper. Um, a lot of people were asking about um the immigration assumptions that are behind these numbers. Um, and um, so it both where where are we currently in terms of of immigration numbers and and if in fact the current um crackdown um continues what would what would that do to your to the projections Dan: so I mean it's the biggest unknown right and it's it's interesting in the projections that it's the most volatile element right but that results in the simp most simplistic view because it you know it's it's it's a large unknown um but as as the natural growth recedes it has a bigger and bigger impact right so so you know the the expectation for the future I mean all I can see is that you know I guess if the question is does the immigration assumption have a big impact The answer is yes. You know, we could see in that chart about what kind of what the current estimate is about historical the current estimate, you know, also kind of equates to only getting the typical legal permanent resident additions, right? So that kind of gives a benefit. But the fact that you know assumptions of immigration are being reduced um is you know is is is is right. you know, it means that we would need to reduce the household growth projections which are already leading us to some historically low growth rates, right? Um, but you know, if your expectation is that we'll maintain the same level of legal permanent residence, that's what the main immigration assumption does. If you think those are going to get halfed, you know, and that's kind of what the low immigration assumption does. But um but yeah, I don't I mean all we can do is have a certain sense of what changes to immigration, you know, the magnitude of changes that we're we're dealing with. And so, you know, from anywhere from, you know, the difference between our our medium and low immigration assumptions was, you know, moved it from about 8, you know, little less than 9 million households per year to a little less than 7 million. had an impact of about 2 million fewer households over the over the next 10 years. So I mean I mean any any decline in immigration below half of you know the current in average increases in legal permanent residents would mean that much less because we saw a growth in growth in the in the n in the native population. Well, the resident population is turning negative in 2038. And immigration, whatever that is, is what's what's, you know, keeping that that overall population growth positive, you know, for however much longer after that. Um, so so yes. David: Yeah. Um, there are a bunch of questions all sort of related to what does this mean for the demand uh for housing? Um and and then and and you may want to take this separately. You know, do we have any thoughts on on what this suggests about about the price of housing? But but particularly um the demand for housing and and particularly the fact that there are so many older households, does that change the nature of of of the demand? So, if you could sort of speak broadly to demand and and a little bit about whether there's there's some nuances in in what kinds of housing. Dan: Yeah, I mean a couple thoughts. Uh this I mean this was a big a big topic of the paper released in January, the overall household growth projections, right? And I mean one takeaway from that is that household growth you know this decline in household growth really means less pressure right on the housing stock less pressure to increase the housing stock over time uh because the rate of you know you know not we have to make up for the shortage plus whatever growth is on top of that right so if that growth slows then it kind of takes the pressure off you know making up for this you know keeping supply up with demand Um the dynamics of that of the slowdown in household growth really you know in that paper were pointing to increasing dissolutions of households. So increasing older old oldest adults uh you know 80 and over uh you know mortality rates uh moving in with you know with younger children you know losing households. We're losing a lot of older adult households. And so it's not that kind of formations are slowing per se. It's that we're, you know, old we're losing more. We're not we're going to continue to gain the same number of younger households coming online, but we're going to lose more and more households over the time. So that loss rate is going to increase. That's also going to kind of shape the dynamics of of demand for new construction. um meaning there'll be more you know more more need for renovation of housing of older adults you know that comes onto the market so that too will eventually help solve the lack of you know for sale inventories as more inventories will go but this I mean this is a we're talking about decade here um so it's something that's going to evolve over time what these tenure projections show us is a lot of that you know action of is is on the is for in the home ownership market. So, a lot of the homes that are being, you know, given up by older oldest adults will be will be homeowner households. All right? Or, you know, so that doesn't mean that the the new owner will be, you know, could be someone who rents out that unit, but there's going to be it's going to free up a lot of homeowner units as well from this, you know, from from these. Um but yeah, I mean the other striking thing in terms of what's demanded is the the big surge in rent, you know, in in middle-aged renters that this low trajectory low, you know, low trajectory home ownership scenario gives us is and that's kind of like I almost want to say that's more of the same, right? It's like we have this this blockage of, you know, access uh to home ownership for first-time buyers, which is leading to more higher income renters, more older renters. And that's you can really see that when you switch from in our scenarios when you switch from the kind of average trajectory to the low trajectory of home access to home ownership and a big surge in these middle, you know, middle-ag older, you know, o older renter households. So that means a lot of millennials gen Z continuing uh to rent uh in into the future. David: Is there is there you you spur a thought in my head about a dis is there any diff significant difference um or I guess the first question you'd look at it in in terms of middle-aged renters um or middle-aged households that have kids versus those that don't have kids because I can imagine one scen which seems to me is is has a lot to say with what the demand's going to be. Um, so if I if I think there's going to be a large increase in middle-aged renters, am I thinking that those are mainly, you know, 1 or 2 people, no kids, or that am I thinking that that's just as likely to be, you know, 1 or 2 adults w with kids, different kinds of demands, different kinds of amenities, etc. Dan: Right? And it's, you know, I think the way that we did this, it would suggest, you know, more middle-aged renters with kids, right? It would, it would, if access to home ownership, unless that, you know, and that's a whole different study as to whether access to home ownership um, you know, influences decisions to have children, right? Uh but uh but I think you know just kind of the sort of thinking about the arms length sort of thing that we did here you know would suggest we have growth in households with children you know middle-aged households with children we have a lack of access to home ownership leading to higher you know middle-ag lots of middle-aged renters so you know I think it's just kind of a mathematical thing for us right it's like um you know it's going to lead to higher demand in the rental market for for for for you know uh the needs of households with with children which which we've seen you know then that that plays itself out in in in the growth in single family rentals right and you know the uh the types of rental unit you know matching the types of unit that a a larger family would need um whether it's an you know whether they own the house or rent it. you know, what what are people with children looking for? And so I think that's going to, you know, has seems like it's it's that low home ownership rate scenario would kind of put more of that demand to, you know, satisfy the needs of households with children on the rental markets. David: Do you have a sense of um how the kinds of changes that that could be happening um you know the slowdown in in in household growth um and you showed I think a pretty dramatic early slide on on the slowdown particularly in in in in homeowners um and how that might affect house prices, house rents, you know, and and affordability. And and I guess I'm thinking a slight variant of that question is is and putting on your state of the nation's housing hat like are are we seeing beginning to see any signs of of changes in in um in in house prices either nationally or or regionally? Dan: Yeah. So just trying to think. So is the question is would reduce growth in homeowner house it's kind of chicken and egg I'm thinking right um you know will reduce growth in homeowners to ask the question you have David [attribution inferred]: right right well right now skirting the question a little bit right because um there's a little give and take right so any any change in affordability would you know would would lead to more more homeowners So, so I think there's some inner machinations we would have to kind of go through. Um, but I think the bottom line is that home ownership right now is super expensive to access. Dan: Yeah. Um, and it's the case is it's, you know, it's it's I would say it's the leading factor keeping people from, you know, becoming homeowners. we've seen those that chart of increase you know the the increase in the number of homeowners just tanking um to get beyond that right would would take something that's not in our projections it would take some economic boom or some financial change or switch right you know difference that we saw uh which would lead to more home ownership but would, you know, ultimately drive up prices still more, right? So, I don't know if I'm being super clear, but David: I I mean, I I I again, it's it's it's a tricky one. I I guess the related question is what are what are what are we seeing in terms of the pace of either new permitting or new or new completions? um that in a variety of ways, you're you're certainly showing at least on the home ownership side um a a declining a declining demand. If we define demand as people in the market because they can afford as opposed to what they want but but can't afford are I I would think that as people look at these projections and and look at some of the other issues and and the flip is are we seeing actually a still strong rental u new rental construction as as people conclude that they're going to continue to be more more renters or Dan: Yeah. I mean it's playing out that way. So it's playing out in a way that increasingly favors our, you know, low home ownership, high rental demand scenario through the year. since the since our June you know State of the Nation's Housing report uh came out we have been seeing a rebound in multifamily con starts you know where at the time we were seeing starts declining when in back in June we you're still like seeing that looking like a trend down but now it's a trend up in multifamily starts and it's a trend down in single family starts which tends to go to the you know the for-sale side uh signaling the kind of the the barriers to home ownership the affordability barrier. So I think these signs are playing out in a way that's saying you know multifamily rental demand is is strengthening uh you know as a result of these barriers to home ownership which are you know affordability barriers are hurting construction levels. they're hurting. You know, the the the existing home sales are still um you know, lower than they were, you know, 30 30 years ago. Um even though they're moving up, they they are still way down. You know, they moved up for the last couple months, but they're they they're still down from where they were even last year when it set a record. So, if I might be a little bit late or like may not be completely up to date, but that still I mean there's still significantly low, you know, existing home sales. So, I think this is all playing out in slow home ownership, hard to access home ownership, um, and it's resulting in not surprisingly, but, you know, it's helping with with the rental market um, demand. David: Well, we've we've come we've come to the end of our time, certainly not to the end of our questions. Um, uh, and we will share your questions with with Dan. um and he may um uh choose to respond to to some of you but um and really helpful uh for us. So thank you for all of you who who put in questions. I was listening to Dan and in particularly when you put up the slide showing you know different projections that you know there's a famous a famous quote that's been attributed uh to everybody from Yogi Berra to Niels Bohr uh the the Nobel Prize winning physicist um that it's very difficult to make predictions particularly about the future um and yet we have to make the best guesstimates that we can um you know for a variety of of reasons for investors for planners um for for for public policy and and it's something the joint center has a long tradition of of doing this and I think doing it it reasonably well um notwithstanding the graph you showed and and um really appreciate and and on behalf of everybody here thank you for unpacking it in such a careful thoughtful and also very clear uh way to just really help think through a lot of the nuances of what will actually um drive demand And so I I hope everybody will will join me in thanking Dan. We look forward to seeing those of you who are students in Hack-a-House next week and then back in 2 weeks um for our next housing seminar on fire safety and multifamily buildings. Thanks a lot everybody. Have a great afternoon and um we'll see you in a bit. Chris Berg: Hey everybody, hope you can hear me. Chris Berg here uh with Abernathy Holdings in the self- storage report. Pretty interesting information and breakdown of where they see the demographics uh of this nation going as far as household ownership. Uh sounds like Renters Nation based on some of the information in this presentation. You can see the question there scrolling across the bottom. Just curious what your take is, what you see. Uh is that a headwind or a tailwind for self storage? Um, if you've been following the self- storage report with Thaddeus Campbell and myself, I think we probably agree, hey, this is a strong tailwind for self storage because you look at some of the home builders out there today, Lennar, D.R. Horton, many of them talking about building a much smaller footprint, much smaller homes because of this affordability crisis that our nation is facing right now. We see President Trump talking about a housing emergency that he's going to do some things it sounds like with zoning to help increase supply. still not going to matter from construction standpoints. You're still going to see that smaller footprint of homes and even right now in multifamily. Hear a lot of multifamily people talking about, hey, we're going to be building smaller units within our multifamily assets as well, which again I think is going to bode well for self storage. Recently at the SSA in Las Vegas, they talked about millennials having a dramatic increase in usage of self storage. They use it much more as like a extra garage than maybe the baby boomers did. So, just would love your point of view on that. If you're someone that is kicking the tires looking into the self- storage asset class and then you look at some of the 10-year demographic information spelled out here, you look at what the homebuilders are presenting as far as footprint, multifamily, I think you can make a really strong uh bullish case on why self storage is continue to be a very strong asset class, especially as many people know, it's very recession recession resistant. maybe not recession proof but recession resistant. Um so we'll continue to update here on the self storage report. I thought this was great information. If you would please share this with your colleagues um help people better understand what's going to be taking place over the next 10 to 20 years again and I think one of the most important variables discussed there was the immigration aspect right like where does that continue to go? Do we continue to have nobody crossing our borders? Obviously that's going to be the case throughout this Trump administration. Does that change um with a new administration? Obviously, only time will tell. So, again, thanks for joining us here on the commercial real estate report. I'm Chris Berg. Um we'll see you back here soon. — END OF TRANSCRIPT —