Young Americans are not moving out. Household formation is down. Many are blaming this on tight credit, high housing prices and weak job creation. Indeed all of these are contributing factors. However, I think there are some social implications that are being ignored which are cultural in nature. As the Millennial’s come into their own they’ve always interacted with technology in a way never before seen. So, for example in the 70’s or 80’s and even into the 90’s human interaction was mainly of physical and social nature. If you wanted to meet someone you had to physically go out and meet them in person. Today, people can have romantic encounters and form real relationships without ever meeting in person. Yes, at some point they will meet in person but the point here is that so much has changed. So, how does this relate back to buying a home or house formation. Well, twofold. One, I think people are taking longer to “mature,” or it could be said that adolescence is lasting longer thereby delaying a home purchase. Second, when so much of one’s life exits ONLINE there’s less attention paid to one’s physical environment thus, as long as a person has some sort of shelter (Maslow’s hierarchy of needs) much less attention is giving to their “home.” Think about it, if 85% of their time is spent online maybe their most important purchase should be a chair! These cultural and social shifts are still occurring and their impacts may still be hard to gauge but we shall see.
Household Formation Continues to Fall