Real estate prices in certain U.S. cities have reached levels so high, they could be increasing the chances of a “demographic time bomb.” A new study suggests that in some cities, housing has become too expensive to financially support the raising of children.
CGTN’s Karina Huber has more.
A new study by online real-estate site Zillow has found a link between U.S. cities with expensive housing and falling birthrates. Areas that saw the biggest increase in home values like Alameda County near Oakland, California saw the greatest drop in fertility rates.
“The home values increased 60 percent between 2010 and 2016 and the fertility rate dropped 25 percent over that same period,” Zillow Economic Research Director Aaron Terrazas said.
Other factors could explain the correlation. High-cost cities tend to attract women who are career-oriented and that can cause some to delay or even forgo having children. But rising costs – including student debt, healthcare and housing – seem to be a deterrent to starting families.
“Eighty-two percent of young adults surveyed said that financial stability is important before they start their family and high property prices make that all the more difficult.” added Terrazas.
In 2017, the U.S. fertility rate hit an all-time low. There were about 60 births per 1,000 women aged 15 to 44. That’s more than three percent lower than in 2016.1 The deep decline started in 2008 when the financial crisis hit.
“Typically you do see fertility rates decline during recessions but they typically rebound. This time it’s different,” Kathy Bostjancic, head of U.S. Macro Investor Services at Oxford Economics said, adding that this could lead to a demographic time bomb.
If birth rates are falling while people are living longer, that leaves fewer workers to support retiree entitlements.
“So when you think of social security, you’re going to go from three workers to one retiree to two workers to one retiree so that ratio drops,” Bostjancic said.
Fewer young workers will hit U.S. economic growth and grow the U.S. deficit. The retirement age will likely have to increase, entitlements will need to be cut, and taxes will likely need to rise.
But there is one silver lining.
“We need net immigration. And looking at the numbers we assume that net immigration is about a million-or-so per year going forward. If that number is less, that’s even more of a burden on the economy and the budget.” said Bostjancic.