New research indicates a strong correlation between increasing housing expenses in the United States and the ongoing decrease in birth rates. This phenomenon, which has been observed since the 1990s, suggests that the financial burden of housing significantly influences family planning decisions. The implications of this trend extend beyond individual choices, posing potential challenges to economic stability and the sustainability of social support systems.
Benjamin Couillard, a doctoral candidate in economics at the University of Toronto, has presented a paper, currently undergoing peer review, that connects the escalation of housing costs with the decline in the U.S. fertility rate. His analysis suggests that if housing expenses had remained stable since 1990, the nation would have witnessed an additional 13 million births. This figure represents an 11% increase over the actual number of births between 1990 and 2020. Furthermore, Couillard estimates that the substantial drop in the total fertility rate during the last decade would have been reduced by more than half if housing costs had not risen.
According to World Bank data, the total fertility rate in the U.S. stood at 2.08 births per woman in 1990. By 2023, this figure had fallen to 1.62, falling below the replacement level of 2.1 births per woman, which is necessary to maintain a stable population size. A sustained decline in fertility rates can lead to an aging population and a shrinking workforce, placing increased pressure on social programs like Social Security, which depend on a healthy ratio of workers to retirees.
Couillard's research utilized U.S. Census data from 1990 to 2020 to develop a model that examines the interplay between housing choices and family formation. The model analyzed how various household types, including singles, couples, renters, and homeowners, reacted to fluctuations in rent and the availability of larger residences. By simulating a scenario where housing costs did not increase, the study estimated the aforementioned "missing" births.
The study also explored the impact of constructing larger, family-oriented housing units. The findings suggest that focusing on building homes with three or more bedrooms could be significantly more effective in boosting birth rates compared to constructing smaller apartments. While smaller units contribute to affordability, Couillard argues that they alone are insufficient to achieve demographic sustainability or enable individuals to have their desired number of children. He emphasizes the need for a strategic shift towards developing more spacious homes to support growing families.
Phillip Levine, an economics professor at Wellesley, while not directly commenting on Couillard's paper, acknowledged the complexity of identifying the precise causes of falling fertility rates. He noted that many commonly cited explanations, such as the rising costs of raising children, including childcare and general living expenses, often do not fully account for the observed trends. However, Levine did highlight existing research supporting the notion that improved access to homeownership can positively influence fertility rates.
He further elaborated that homeownership often coincides with the decision to start a family. Therefore, if younger generations face greater obstacles to owning a home, their life plans, including the timing and size of their families, may be significantly altered. This underscores the broader economic implications of housing accessibility and its role in shaping demographic trends, which ultimately impact the long-term health of the economy and social welfare systems.