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Consumer optimism and household formations -2015

Consumer optimism in the United States has hit an 11-year high due to the strong job market, low gas prices, and a healthy housing market. Since the majority of Americans rely on a solid job for earnings and their biggest asset is their home, they are feeling pretty happy right now about how the economy is doing. There is currently a rapid growth happening in household formations across the U.S. since young adults between 18-26 are now finding jobs as the job market comes back to life. This is allowing them to move out of their parents homes and get there own place. Many of these young adults had their families living with them at their parents homes as they struggled for employment or were under employed.

Majority of these new household formations are happening in the rental market. This of course is lowing the vacancy rate for rentals and has begun to push rental prices back up again. We expect that as many longer term renters feel the pinch from increased rents they will begin to consider buying VS. renting, and look to purchase a home with 30 year financing so they can lock in their fixed payment long term and stop dealing with increased rents each year.

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