Key demographic trends shaping the housing market

Demographic shifts and changing values in both urban and suburban areas are driving an increased demand for pedestrian-friendly, mixed-use communities that offer a variety of housing choices.

In his recent report: Housing in America: The Next Decade, John McIlwain of the Urban Land Institute states that “The age of suburbanization and growing homeownership is over…The coming decades will be the time of the great reurbanization as 24/7 central cities grow and suburbs around the country are redeveloped with new or revived walkable suburban town centers.”

According to McIlwain, this transition will be fueled by the growth of two-person households, an end to baby boomers’ suburban infatuation and public policies designed to stimulate compact development. In his report, McIlwain points to four key demographic trends:

  1. Older Baby Boomers are becoming seniors. In the coming decade, fewer of the older Boomers will be moving. Those who have not sold their suburban homes will find themselves trapped by falling prices and a weak seller’s market. Those that can move are no longer flocking to the Sun Belt, instead moving closer to their children and grandchildren.
  2. Younger Baby Boomers are facing very different challenges. They have decades before they consider retiring and their children are likely to still be at home. Some may find their suburban homes now “underwater” and those not underwater will be hard to sell.
  3. Generation X and Y will be renting far longer than past generations. This generation’s attitudes toward homeownership have been changed by the housing crisis and the recession. They see people trapped by homes that can’t be sold and millions of foreclosures, which have tempered their interest in buying their own homes. This generation has to pay off existing school loans and has lost the confidence of prior generations that homeownership is a way to develop wealth. They say they want to live in urban areas, not in the suburbs where they grew up, and they are willing to live in a smaller space in order to afford this lifestyle.
  4. Immigrants and their children will want to move to the suburbs, but may find them too expensive despite the current drop in housing prices.


McIlwains report is focused at the national level, as these trends are not specific to any one city or region. The report goes on to talk about what these trends mean for the housing market, and how these trends will shape the built environment in years to come.  These nationally-recognized trends are apparent and prevalent in the Atlanta region.

The baby boomer generation has traditionally shaped the growth and development patterns of the Atlanta region. However, metro Atlanta is very young when compared to other metros in the nation.

For example, Atlanta has the second-largest share, behind only Dallas, of those aged 25 to 39 when compared to 26 other metro areas with a population larger than two million. This age group generally carries the least disposable income but still desires to live in urban, walkable neighborhoods with access to shops and services. Is housing product available or being developed in a manner that this population can afford throughout the region? If not, is this because the market is not demanding this product, or because regulations still widely foster the development of larger single-family homes?

Along with its large share of younger adults, the Atlanta MSA currently has the lowest share of population over the age of 65. However, this is the fastest‐growing age group in the region. By 2040 it is estimated that the Atlanta region will be home to more than 1.6 million older adults. The needs of this growing older adult population will require not only supportive programs and healthcare innovations, but also smaller housing choices in communities that allow for an independent, active and engaged lifestyle.

Due to its aging population and the changing dynamics of families in the region, data indicate that the majority of the region’s households already consist of families with two persons or fewer. The share of these households is expected to increase over the course of the next thirty years.

All of these trends suggest that many households will look to downsize their homes. Even so, many local regulations still tend to favor large, detached units. From 1990 to 2007, the net number of housing units in the 10-county Atlanta area increased 59 percent, with the most noticeable increase in single-family, one-unit structures. Single‐family detached housing units represent the primary housing product available to consumers in the region.

In 2008, 1.14 million of the 1.68 million housing units in the region were single-family. That is 68 percent, and single‐family construction remains the preferred type of housing development encouraged by local governments.

While there are legitimate reasons to encourage single‐family construction, these regulations make shelter unaffordable to many consumers. As the nation and the region emerge from the recession and the housing market improves, demand from the four demographic groups discussed above will increase.

Will local governments be able to understand these changing market dynamics?

If so, will they address local regulations in order to facilitate future development in a more sustainable and inclusive way?

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One Response to “Key demographic trends shaping the housing market”

  1. Serial keyz Says:

    great post, really informative i know where to go if i need more info

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