While traditional homeownership has long been a staple of the US economy, shrinking household size & long-term economic pressures are changing housing preferences. This trend has important implications for the future spending patterns of consumers who are less likely to be house poor.
In December 2022, the construction of multi-family units exceeded the construction of single-family houses for the first time since the housing crisis in March 2009. Before that, this same intersection had not manifested since December 1973 (at the start of another deep recession).
What is notable about the chart below is the 12-year trend of steadily increasing multi-unit development since the Great Recession, with a sharp post-covid acceleration. Further, we can see the development of new single-family housing has been depressed during this same period.
Smaller households suggest the need for smaller residences & the chart below shows a sharp -30% decline in “all household” size since 1947. This trend, taken together with a long period of economic pressure since the Great Recession, is driving a demand shift from traditional home ownership to the rentals of smaller apartments.