The End of the McMansion? Changing Demographics – Immigrant Households

The median size of new homes in the U.S. increased from just over 1,500 square feet in 1973 (the first year the Census Bureau began tracking new home size) to 2,309 square feet at its peak in 2007. The median size has declined almost 10% since then. Will the trend to smaller-sized homes persist? Let’s consider Immigrant Households.

Regardless of the government’s actions with regard to immigration reform, immigrants and the children of immigrants born in the United States will continue to be a significant factor in household growth. The Joint Center for Housing Studies of Harvard University has released two new household projections based on the Census Bureau’s latest population projections. The high series assumes that net immigration rises from 1.1 million in 2005 to 1.5 million in 2020. The low series assumes only half that pace of immigration, as well as a small decline in headship rates among the native-born population. Under these assumptions, household growth in 2010–20 could total as much as 14.8 million or remain closer to 12.5 million (nearly the same as in 1995–2005). While white household growth will occur primarily among single-person households and the number of married couples with children will fall by nearly a million among whites, household growth among Hispanics and Asians will accelerate, increasing by more than a million. White household growth will slow sharply from 4.3 million to 3.3 million, and black household growth will slip from 2.4 million to about 2.2 million. Even under the low immigration assumptions, minorities will fuel 73 percent of household growth in 2010–20. Hispanic household growth will increase from 3.5 million in 1998–2008 to 4.5 million in 2010–20, while Asian household growth will increase from 1.5 million to 2.5 million. As a result, the minority share of households is projected to increase from 29 percent in 2005 to 35 percent in 2020. Asian Americans as a group are well educated and have the highest median income of all races. However, they only comprise 5 percent of the total U.S. population and, generally, minority households have lower average incomes and wealth. Thus, the increase in minority households could add significantly to the nation’s already widespread housing affordability challenges.

But the housing now occupied by many older white Baby Boomers will be well suited to the needs of these younger and generally larger minority households. These minority households with their lower incomes may be unable to afford these homes except that, as noted previously, the sell-off of existing McMansions by Baby-Boomers wishing to downsize could occur without regard for demand, resulting in excess supply. This excess supply and competition for buyers could create downward pressure on home prices and help improve affordability. While this excess supply of existing large homes and downward price pressure should limit the demand for new larger homes, it should also allow the Baby-Boomers to move creating demand for smaller new homes.


President / Builder – Chuck Miller Construction Inc.

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