Photo: Robert Clark
While it is common for there to be an uptick in the number of babies born as the economy improves, current birth rates among US Millennials are bucking the trend.
In fact, birth rates in US counties with the fastest home price appreciation have dropped substantially — most notably on the West Coast, according to a report released yesterday by the listing site Zillow.
The Golden State is home to many of the most notoriously pricey housing markets, like San Jose, Los Angeles and San Francisco.
“There are many highly personal reasons beyond housing costs why some couples may delay having children, or choose not to have them at all, and it’s important to remember that correlation does not necessarily mean causation,” Zillow Senior Economist Aaron Terrazas says in the digital release.
The national birth rate began declining at the onset of the Great Recession, dropping from a high of 2.12 babies per woman in 2007 to 1.93 babies per woman just three years later. And, the birth rate has continued to fall through 2016, even as the economy has improved and all but recovered from the crisis.
Zillow ultimately determined that an extra 10 percentage-point rise in home values correlated with a 1.5 percentage point drop in birth rates in women aged 25 to 29 years. This was the “trend line.”
Aside from several white-hot pricey California markets, this trend can also be observed in the Austin, TX, Brooklyn, NY and Seattle, WA housing markets.
The birth rate dropped 17 percent from 2010 to 2016 in Los Angeles County, while at the same time home values rose 31 percent.
Zillow estimated that over 2,500 fewer babies were born to women aged 25 to 29 years in 2016 than would have been expected “given local home value growth,” says Zillow — the greatest drop in births among all counties analyzed for the report.
In Brooklyn, the birth rate dropped by 15 percent as home values rose by 36 percent between 2010 and 2016, amounting to 569 fewer babies being born.
The “expected” birth rate is based on the observed home value growth. For example, according to the trend line created by Zillow, Los Angeles County’s home price appreciation of 31 percent from 2010 to 2016 would, on average, be associated with a 10 percent drop in fertility — the “expected amount.”
But, the birth rate actually fell by 17 percent, which is an extra 7 percent below the trend line and expected amount — equating to 2,588 fewer babies than expected.
Conversely, the birth rate was up in counties where home price appreciation was weaker. For example, home values have been virtually unchanged in Pima County, AZ (home to Tucson) since 2010 but the birth rate was up 5 percent, or 340 more babies born than expected.
But the bigger question the research by Zillow poses is whether or not Millennials are delaying childbirth or choosing to have fewer children — and, so far, the home search site says the data is mixed.
“Recently released preliminary data shows fertility rates among 30-something women fell in 2017 for the first time since 2010, an ominous sign, but then again, respondents to recent census surveys indicate they expect to eventually have just as many children as respondents in prior years,” Terrazas says.
Another possibility is the challenge of housing affordability. Having and raising children are a hefty expense, and some Millennials may be waiting until they move to more affordable communities before starting a family.
National home values are appreciating at their fastest pace in 12 years, and are projected to rise another 6.5 percent over the next year, according to Zillow. And, a 20 percent downpayment on the typical home translates to more than $40,000 — which could be keeping homeownership out of reach for many Millennials.
Click here to read the entire release.