Demographically, Things Will Be Better

Previously I wrote about how demographics tell the true story about the housing absorption in the U.S., in-spite of optimistic predictions some pundits are making about a recovery.

I also quoted Lawrence Lindsay's analysis of these numbers.

Yet well beyond the recovery we're all hoping and waiting for, the housing market will be on fire in future years.

The Census Bureau is forecasting 52 million housing units will be needed to accomodate popoulation growth of the next 40 years. 52 million is a large number.

Currently the U.S. adds about 1 million housing units a year of all types (single and multi-family). So one can see the upcoming housing shortage of about a million units a year or more. The "or more" is because this doesn't factor in those housing units coming out of the supply due to deterioration.

The current slow economy, or slow housing market is depressing and difficult to live with or in, depending on what one does for a living. However, wise investors and wise mortgage people should see beyond the current malaise and work as hard as possible to keep their doors open.

Why?

Because the longer this housing recovery takes, the greater the eventual recovery will be. The longer the economic slowdown lasts, the greater the eventual upside will be.

Pent-up demand, once all the surplus supply has been absorbed, will be enormous. There will not be enough housing available. Builders will have an order backlog, mortgages will be in huge demand, and the market will suddenly spring to life and economic growth will skyrocket.

Of course there are problems with such growth, but perhaps at that time lending will be more intelligent and prudent to prevent the problems that created the current credit environment.