From the latimes.com:
All across the country, elbow room in households like the Grissos’ is disappearing as jobless brothers and foreclosed in-laws move in with family, and as young adults return home after unhappy ventures into the working world. The average home today has 2.59 people — the highest number in a decade. And just 357,000 new households were formed in the U.S. last year, the lowest number since at least 1947.
That has a big ripple effect on the economy, pushing down demand for new homes and the big-ticket items that go with them, such as washers and dryers. The trend will shape the country for years to come, as young people put off marriage, children and homes of their own.
Living in a combined household isn’t easy: Families are dividing spaces that were once private and skimping on things that never before seemed a luxury. But the Rouths say they didn’t have a choice.
“We had to break down and be humble about it, and say, we can’t get jobs, let’s just do it,” said Philip’s wife, Lisa, who has a creamy complexion and shiny brown hair. “It was a hard step, at least for me, to have to go into their household and live their way, with my two children.”
http://www.latimes.com/business/la-fi-crowded-house-20101225,0,1851236,full.story
I think this is the point most have not taken into account,
These people will be looking to move out just as soon as they can afford to.
Anything close to 6% unemployment and I think you housing bears are in for a big surprise.
Jiji,
It’s you who are in for a surprise, as this trend is only beginning and has a long way to run.
Agreed, TJ. Our labor market is 10 years or more away from recovery…assuming it ever does recover. There are no more jobs for low to moderate skill workers and we have a country full of them.
A decade of irresponsible construction masked the drain on our jobs and now that we’ve run out of things to build profitably, we are pretty well screwed.
The whole flaw in Jiji’s thinking is the “as soon as they can afford to” part. Without jobs that pay a good enough wage that people can afford to buy overpriced housing, there won’t be any “affording.”
Of course the cuts in state budgets all across the country are just really getting underway, that means fewer government jobs which used to be the middle class bread and butter. 60 Minutes had a segment last week about state budgets, and CA isn’t even the worst if you can imagine (Illinois was). On the other hand, I braved the malls today, and people were buying everthing that wasn’t tied down. . .guess someone has money!!
It’s the have nots (no college education and under educated) that will be under water for a long, long time. California must be brutal for low income earners. The really scary part is the health industry keeps expanding and the large majority of the money paid out is government money. Throw in the ever expanding Federal Government and decreasing local and state government services and employees (teachers and administrators) and the great (USA) oak is rotten to the core! The great thing about the midwest is you can still rent a house or apartment at a reasonable amount that won’t completely wipe out your salary.
I don’t disagree that people will be looking to move out of a overcrowded family house but I think most of them will be looking to rent rather than to buy. If you can go near zero down then you could have people buying homes as new households form but my bet is they look to rent first. Probably cash flow rental property will do well, so the rent to buy equation becomes even more important as we move forward. Of course all this assumes we find a new lucrative industry to employ these people. The 6% unemployment is the huge if in this scenario.
I hope that all these people who want to move in with family realize the burden they are putting on them, especially those who go home to elderly parents. All I see on these boards is “oh, how horrible to have to move back home and live with them” – oh, really? Try getting over yourself and having some gratitude. Do you think they enjoy constant clutter, screaming children, things getting broken, no privacy or alone time? Constant togetherness is no picnic when you’ve built a life for yourself that intentionally did not include it.