After reading the National Association of Realtor’s article about the 15 to 19 age bracket and their housing needs, in my previous post. It got me to think about our Region’s demographics and I was curious about some “ballpark” estimates on future housing demand in the Twin Cities area.
What kind of numbers are we talking about for the 15 to 19 age group and the 20 to 24 age group? Here is the 2010 Census Chart on Age/Sex of the 7 County Twin Cities Region.
The 20 to 24 and the 25 to 29 age groups have been hit really hard by unemployment and have largely been left out of the housing market. Let’s run some assumptions based on the 15 to 19 and 20 to 24 age groups.
Here are the numbers broken down for the age groups.
The 15 to 19 age group consists of 193,289 people in the 2010 Census for the Twin Cities Metro area. We can’t assume that all of them will need housing; some will relocate out of State, some will get married, some will choose renting over owning and some will stay home with Mom and Dad. So I am going to run with 50% of them will need housing, it is just an arbitrary percentage I pulled out of thin air – maybe it is too high or too low but it is a nice round number. So 50% of 193,280 of the 15 to 19 age group would be 96,644 housing units. This will be over a period of let’s say 10 years for easy math and enough time for those age groups to enter the housing market, they would need 9,664 housing units per year.
If we look at the 20 to 24 age groups at 190,135 people, using the same 50% ratio we come up with 95,067. Over the next 10 years would be 9,506 housing unit per year.
Looking at the 25 to 29 age group gets a little trickier to guess the numbers. This is the age group that should begin to enter the housing market but with the economy many in this age group have been stuck. If we were to run the same ratios we would come up with 110,383 housing units and over 10 years would be 11,038 per year. I don’t really like those ratios on this age group, because some have entered the housing market by taking advantage of the First Time Homebuyer Tax Credit. So for these purposes I am going to leave them out of this projection even though there is a fairly large number here that will enter the housing market.
So just looking at people age 15 to 24 we have a grand total of 191,712 housing units or 19,171 housing units a year. Considering we have approx 24,000 housing units for sale, this could put a lot of pressure on the supply / demand ratio. Remember, we have already accounted for the marriages and moving out the region in these figures. We haven’t taken into account the deaths and migration in this ballpark estimate, so it is not a figure I would use to do any serious forecasting with.
This estimate does however show us the “Pent Up Demand” that needs to be un-lodged , the only way to un-lodge this pent-up demand is to get these age groups Jobs.