Determinants of Growth in Multiunit Housing Demand since the Great Recession: An Age-Period-Cohort Analysis

Abstract

Following the Great Recession (2007–2009), growth in multiunit housing starts has been exceptionally strong and sustained. In this study, we examine empirical evidence for three possible explanations, namely, the passage of Baby Boomers into senior years, the depressed economic conditions, and rising preference of recent birth cohorts for residing in urban cores. Applying Age-Period-Cohort analysis to census data on multiunit housing occupancy from 1970 to 2010, we find evidence to support the explanations that a sharp increase in demand from Millennials drawn to urban cores and retiring Baby Boomers are contributing to the growth in multiunit housing starts. The results provide weak evidence of a negative relationship between depressed economic conditions and demand for multiunit housing starts. Over the long term, demand for multiunit housing can be expected to moderate as a result of the projected aging of the population.