Homeownership affordability series Clashing demographics: Homeownership and affordability dilemmas

Abstract

This paper examines the competing effects of the major demographic factors affecting homeownership affordability in the 1990s. It briefly views the transition in housing eras and then examines long‐term demographic fundamentals, which represent parameters that can be anticipated with reasonable certainty and that define the broad boundaries of future housing demand. The first section, on household segmentation‐diversification, focuses on changes in household configurations and future living‐arrangement choices. Income variations by age and household configuration are evaluated next, after which homeownership variations by age and household configuration are reviewed. Both the uncertainty of future household segmentation and clashing demographic variations in income levels and home‐ownership rates define future housing market complexity and uncertainty.

Following that is a summary of the key demographic parameters and dilemmas emanating from the preceding analyses. A final section then explores the net effect of these factors on various housing market segments for the balance of the decade.