In Which I Welcome the WSJ to 2011

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Longtime readers of this blog know that I’ve been talking about Millennials for years now. Back in April of 2011, I wrote a post worrying about Millennials and family formation:

Given the above facts and data, how do you see the Millennials dealing with this issue? Because it’s not a small issue of just boys and girls getting together; family formation drives housing and to a large extent, drives the economy. Men with children work far harder, far longer, than men without — simply because their priorities change the instant they lay eyes on their son or daughter for the first time.

The 230,000 women in the Class of 2008 who cannot mathematically meet a man who is a college graduate… what do they do when time comes to find a husband (or at least a long-term committed boyfriend, willing to provide for her and her children)?

I had discussed the unemployment woes of the Millennials, but one that hits men particularly hard, and the amazing fact that 60% of college students in the U.S. today are women, leading to huge gender imbalance amongst college graduates.

My basic concern was that family formation would remain low, thereby keeping buyer demand suppressed for years if not decades to come.

Well, Nick Timiraos of the Wall Street Journal writes a story yesterday entitled “Rate of Americans Starting Own Households ‘Disturbingly Slow’“. The key graf:

New data show that household formation slowed considerably last year, a potentially ominous sign for the housing market.

Household formation is a key driver of demand for housing. When the economy stumbles and joblessness rises, more people tend to move in with family or double up with roommates. When the economy expands, the opposite takes place as people strike out on their own. Household formation also rises when immigration increases.

Last week, an annual Census Bureau survey showed that the U.S. added just 476,000 households in the year ended in March, compared with an average of 1.3 million in each of the prior two years.

I’d like to welcome Nick Timiraos and the WSJ to 2011!

More seriously, it appears that my fears of three years ago were not that far off. Look at this chart:


Jed Kolko, Chief Economist at Trulia, was cited in the WSJ story:

Mr. Kolko found that the share of young adults living with their parents ticked down last year, which is good news. The bad news: They didn’t form their own households, perhaps moving in with other relatives or friends. This helps explain why the homeownership rate for 18-to-34-year-olds continued to fall last year.

Yes, yes it does. And one might ask what the root causes in dropping household formation may be. Are those causes temporary? Or are they more structural?

I’m voting it’s the latter. Read my original post from 2011 for reasons why. Now add on the fact that there is a real subculture of the ‘manosphere’ (I got the image above from one such blog) that is politically incorrect, sometimes vile, often sexist, and yet growing year over year… and then tell me you’re optimistic about family formation.



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Rob Hahn

Managing Partner of 7DS Associates, and the grand poobah of this here blog. Once called "a revolutionary in a really nice suit", people often wonder what I do for a living because I have the temerity to not talk about my clients and my work for clients. Suffice to say that I do strategy work for some of the largest organizations and companies in real estate, as well as some of the smallest startups and agent teams, but usually only on projects that interest me with big implications for reforming this wonderful, crazy, lovable yet frustrating real estate industry of ours.

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