Industry Round-Up: Robust Single-Family Values, Aging Population Fuels Housing Demand, and Labor Market Shifts

Welcome to our industry news round-up, where we cover the latest real estate trends and location insights.

This week, Jason Stanley, Head of Research at Local Logic, discusses how:

  • Single-family home values remain strong
  • The aging population spurs housing demand
  • The economy grapples with a declining labor market and shrinking savings
  • Smaller office floorplates are reshaping workspaces

Single-Family Home Values Thrive Amidst Transaction Volume Decline

Two side-by-side graphs showing price and construction indices for real estate types

Source: Pretium


These charts from Pretium’s brief September Housing Insights newsletter do a good job of showing why single-family home values have stood up to the collapse in transaction volume

Supply growth is king here, and it has lagged considerably for single-family homes since the Great Financial Crisis (GFC) run-up. Keep in mind that more than 75% of homes bought in a year are single-family homes, and the vast majority of housing stock in North America is single-family. 

In predicting price or value growth/decay, having good visibility on upcoming supply (across residential types — since residential demand spills from one to the other depending on relative value) is crucial.

Aging Population Drives Surge in Housing Demand Despite High Rates

Graph showing increase in population by age cohort

Source: UN World Population Prospects, Census Bureau, Haver Analytics via Yahoo

Graph showing increase in household head share by age cohort

Source:  Census Bureau, Haver Analytics via Yahoo

A good bit of the housing affordability crisis is hiding underwater. 

Yahoo’s article is a good piece summarizing research notes from Barclays on how the aging population is an important factor driving additional demand for housing despite high rates.

Household headship increases with aging, with specific moments spurring larger increases. Retirement is one of those moments — and this is what the very large baby boom cohort is moving through right now.

A lot of ink has been spilled on the fact that millennials are the new baby boomers who are now entering prime homebuying age. While that’s still true, a lot of the additional housing demand has actually come from the increase in household numbers resulting from baby boomers retiring, getting divorced, etc.

Persistent Labor Market Decline and Shrinking Household Savings Point to Ongoing Economic Challenges

Graph showing decrease in change in nonfarm payroll employment

Source: Apollo


The labor market has been slowly degrading over the last two years. The top-line unemployment rate hasn’t shown much evidence of that, but we see it in the slowdown in employment growth, fewer job openings, a lower quit rate, declining hours worked, and slow wage growth for job switchers.

It’s unlikely that these trends will change anytime soon, as the Fed will probably keep rates high for a good spell longer. All of that impacts household income, aggravating affordability for homeseekers. 

Separately, the dramatic increase in household savings that occurred during the pandemic has more or less disappeared at this point. Loan delinquencies are rising as a result of the strain on household finances.

Home Insurance Premiums Soar: Florida Homeowners Hit Hard

Graph showing how smaller floorplates are on the rise for US offices

Source: MSCI


Smaller floorplates are on the rise for US office buildings. That trend saw a spike during the GFC back in ~2008 (small offices became more common, while larger ones disappeared), but the market quickly recovered afterward. Similarly, the pandemic accelerated this trend. Overall, since the early 2000s, the trend has been clear: larger floorplates are on the decline while smaller ones are on the rise

There’s a spatial side to this story that hasn’t been covered in MCSI’s research or discussed anywhere aside from side points here and there: the suburbanization of offices, the rise of satellite offices, more work-from-home, open-concept offices, and so on. 

Together, these trends could allow for more densification of offices, as a larger number of organizations occupy space once held by only a few… Or, they could actually do the opposite, decentralizing offices out of the central business district (CBD), with smaller offices speckled throughout urban and suburban areas. 

To some extent, the latter trend has already been happening over the last decade or two. But will it accelerate? Not clear yet.

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Thao Tram Ngo

October 11, 2023 | 4 minutes read