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The social factors feeding the housing market

Although a boom in the housing market is usually fed by low interest rates and banks willing to hand out mortgages with a relatively small percentage of own finance required, in the long run it is the change in the way we live that has been feeding the more or less stable rise in housing prices over the last decade. The basic equation goes like this: the more households there are, the more houses will be demanded. And the fewer houses are actually for sale, the higher the housing prices climb. Now, until not too long ago families were largely combined under one roof: the parents and numerous children, the grandparents, and maybe even an unmarried aunt or uncle, or a domestic worker to go with it.

All of these were supported by and lived in one big household. Needless to say, this idyllic picture has changed drastically in the last 60 years. Nowadays, the grandparents live alone or in supported living complexes, the parents are probably divorced, the children are leaving the house to go to college relatively early and domestic worker-we wish. Add to that the rising levels of immigration and the number of couples living separately, the increased life span and the fact that people are settling down later in life and you are left with a lot of households needing accommodation. And coupled with a shortage of supply you see prices soar.

But even though prices haven`t exactly soared in the US lately, experts are confident that these demographic factors are stable enough to support a high level of property prices for years to come. The society is ageing, immigration is still on the rise and unfortunately the current divorce trends are also not likely to slow down, so that homeowners can remain calm: in the short-term, what`s going up might be coming down, but in the long run, what`s going up might well be going up even more.