More telling, the “crude birth rate” (the number of births per 1,000 women) was just 10.7 in 2023 – the lowest in the entire history of the U.S. Yes, the lowest since the founding of the country.
Increasing numbers of households are like Beth Davis and Jacob Edenfield, a married Millennial couple who aren’t having children. Davis told WSJ reporter Wolfe, “People told me when I was younger, ‘Oh, you’ll grow into it…you’ll want to start a family,’ and that just did not happen.” The couple, who earn a combined $280K/year, rent a townhome. They dine out at upscale restaurants, work-out at a high-end wellness center and recently paid cash for a BMW.
So, what does this mean for the housing market? At a high level, it means LESS demand for large family-oriented homes, less demand for extra bedrooms, and less demand for conventional single family detached homes. On the flip side, it means MORE demand for homes geared to childless households, more demand for homes with fewer bedrooms, and the opportunity for homebuilders to push densities. This could all be a good thing.
Going forward, particularly in high-cost states like California, where housing affordability is near record lows, we are recommending that our clients consider developing more product geared towards households without children, meaning more attached product (both for-sale and for rent), including not just side-by-side townhomes, but stacked flats as well, and smaller size units in both the rental and for-sale markets. For rentals, we’re looking at studios in the 400 and 500 sf range, up to two-bedrooms in the 700 to 900 sf range. For for-sale homes, the “sweet spot” for townhomes is typically in the 1,200 to 1,600 sf range, while stacked flats is more typically 600 to 1,400 sf. We are exploring other new concepts as well.
Clarity Real Estate Advisors provides answers to all of your real estate market feasibility questions. Our clients include public and private homebuilders, apartment developers and operators, private equity investors, land bankers, pension funds, bond issuing agencies, and the public sector. Our goal is to help you make the best market-based decisions. We provide Clarity