New Households Sprouting Up

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When we spoke about housing last spring and this fall, a key long term driver is household formations. Long run, about 1 to 1.5 million new households are formed each year. Since the financial crisis, we have been substantially below that number – in fact, closer to half. It is hard to use up an oversupply in housing if you don’t have demand.

But what happened last month is HUGE! For the first time since the financial crisis, we are back up over a million household formations for the past 12 months. People are moving out on their own. People are immigrating, and we have more needs for housing. Not just houses, but that means sofas, dishwashers, air conditioners, etc. This is why Warren Buffett says this will truly drive the economy forward. But wait, we now have a fiscal cliff. Which force will win? Stay tuned…

Read more about this topic here on the Wall Street Journal website.

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Catherine Zaharis

About Catherine Zaharis

Cathy joined Tippie in 2008 as the Business Director of the Finance Career Academy. Her experience as a Portfolio Manager and Analyst with Principal Global Investors (1982-2005) makes her a valuable asset, both in terms of her expertise of the industry and her many business connections. Cathy obtained her BBA from The University of Iowa and an MBA from Drake University. She has been a Chartered Financial Analyst (CFA) since 1986 and is a past president of the CFA Society of Iowa.