The number of households headed by someone under 35 a prime rental group expanding faster than the overall population.
The key to the housing outlook is household formation. As defined by the Census Bureau, a household is formed when one person takes separate living quarters, or when two or more people do, regardless of whether those people are married or unmarried, and provided that the quarters aren't in an institution, for example, a prison, nursing home or school dormitory.
The great recession of 2007-09 halted the growth in the number of households led by people under 35. The financial stress also led to the dissolution of some households that those in this age group previously had formed. Net result: The number of younger households fell, even though the ranks of younger Americans continued to increase.
Many of the missing young householders were "boomerang kids." As economist Greg Kaplan of the Minneapolis Federal Reserve has found, these individuals tend to move back with their families thus dissolving their own households when they lose their jobs. Others never left the family home, often because they simply couldn't afford to do so.
Still others entered college or graduate school. College enrollment jumped by an unusually large 850,000 in the fall of 2008, when the jobless rate among young people already had begun to rise. Regardless of the benefits that more education might bring to young people, there is an undeniable downside: more debt.
According to estimates by Mark Kantrowitz publisher of FinAid, which guides students about all forms of financial aid 65.6% of bachelor degree recipients held an average of $23,300 in student debt by 2007-08, with both figures setting records. While the burden of student debt isn't likely to prevent young people from forming households after they graduate and find jobs, it will inhibit their ability to take on mortgages.
Some see a 2.8 million rise by 2015 in the number of households headed by people under 35. But he expects this group's home ownership rate to probably slip to somewhere below its current 38.9%.