Study: Household formations have returned to pre-recession levels

02/25/2015

Study: Household formations have returned to pre-recession levels

SAN DIEGO – Feb. 23, 2015 – While Americans all but stopped creating new households in the worst years of recession – between 2008 and 2010 – University of Southern California researchers say three years of recovery have returned housing formation back on track.

"The freeze in formation is over, and people are again moving out and forming households," says Gary Painter, director of USC's Lusk Center for Real Estate. He says that formations are back to a normal pace of about 1 million per annum.

"So while a number of factors will continue to influence the housing recovery, household formation is no longer one of them," Painter says.

The researchers, examining quarterly data from 1975 to 2011, found that household formation consistently bounced back three years after major economic slumps – even when the job market did not experience a similar rebound.

"This shows us that even a permanent increase in the unemployment rate will not have a permanent impact on household formation," says Painter. "As a result, policymakers and industry practitioners have a new level of predictability when it comes to how economic crises impact the rate of new household (formations)."

Source: DSNews (02/19/2015) Honea, Brian

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