Friday, July 10, 2009

The recession is slowing household formation

The Washington Post points out the effect the recession is having on household formation:
The number of people setting up their own households has fallen to some of the lowest levels in a generation, a trend that threatens to prolong the recession.

Many people, young and old, who in more promising times would be out on their own, are finding themselves ... stuck at square one. ...

The recession has wreaked havoc on all sorts of life plans. Tumbling stock prices have cut retirements short. Layoffs have forced middle-aged children to move in with mom. Falling home prices prompt unhappy couples to rethink divorce. The larger consequence of all these discrete decisions is that Americans are forming fewer households, which in turn helps prolong the downturn.

Government data suggest that the recession has helped push down household formation. ...

Household formation rates could keep falling, said Richard Moody, chief economist for Forward Capital, a real estate investment and research company, because of the strong correlation between job loss and household formation. With unemployment not expected to peak until next year, "a lot of that isn't reflected yet" in the data, he said.


  1. Lowering divorce rates and making one stay closer with their siblings and parents.

    From a moral standpoint, this sounds like a good thing. Its just a shame people have to be FORCED to stay with their spouse or family.

  2. Anonymous said...
    "From a moral standpoint, this sounds like a good thing."

    I agree.

  3. I would be more interested to see a breakdown of household formation by ethnic group and salary. There are certain segments of our population that are just here for a free ride. Having multiple children wether married, divorced, or single doesn't matter to members of this segment of our population. It's all about the hand outs. So, they are somewhat immune to economic conditions when it comes to family formation. Job, no job, who cares.

  4. MRIS data out - Arlington median prices are up YOY - second month in a row. I heard the county counsel is considering renaming it "Immunington".

  5. People staying together versus divorcing is not necessarily the good thing people think.

    There are alot of stats to suggest that back before divorce became socially acceptable, there were alot of people who stayed in loveless, hostile, or even abusive marriages, simply because they had no choice.

    This isnt helpful to kids either. Kids growing up in a loveless/ hostile marriage are often emotionally more scarred than parents who divorce and for happy healthy relationships with new/ compatible partners.

    Basically, people still fall out of love just as much now as they always have. The difference is now we have a choice versus before where (when divorce was taboo) people were often trapped forever.

    Make no mistake, there are alot of marriages where people simply give up or dont try very hard. For these, its good to see the divorce rate drop. However, recognize that for each one of these "lazy" marriages, there is another who is trapped in an awful situation for which divorce would be a far better choice for them and their children.

  6. "Arlington median prices are up YOY"

    Yeah and median SALES prices are down -20% YOY. Tell us what those sales figures are again? oh thats right -50% YOY.

    I could list my used toilet paper on ebay for $1M, dont mean its going to sale or immunue from the slump of retail sales.

  7. "Tell us what those sales figures are again? oh thats right -50% YOY."

    I meant number of sales figures

  8. I totally agree with your article. Really a tough time.

    Boise real estate

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  10. What troubles me is that with the unemployment situation as it is that it could spark a baby boom when what is needed is for the rate of population growth to continue to decline as our limited resouces are nearing the point of exhaustion. I'm especially concerned about the effect of the global economy of developing nations where it was hoped that improvements in education for young women would result in a trend toward increasing average age of first pregnancy, thus fewer overall pregnancies.

  11. "I LOVE when people make bold snarky remarks without researching them and realizing they are wrong. How embarassing!"

    Do you?
    Number of Sales 437 -43%y-o-y

    NEGATIVE 43% dont look UP UP UP to me...but I didnt fail math back in grade school.

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  13. mr. suuuckit,

    The link you provided doesn't work. But I generated a report from the same website to see what you were talking about.

    Average Sold Price in Arlington from mr.suuuuuckit's link:
    2009: $499,122
    2008: $508,811
    price change: - 1.90 %

    That minus in front of the number means a decline, its a tough concept for grade school drop outs I know.

  14. The anonymous commenter who keeps saying "suck it" has had his comments deleted in accordance with the new blog comment policy.