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Americans of every age group and ethnicity are forming households at lower rates than before the 2008-09 recession – add them all up, and they total about 5.7 million potential households that have not been formed, according to a new Zillow analysis.

“The housing crash set back millions of Americans on the path to having their own place to call home, whether they owned or rented it,” said Zillow senior economist Jeff Tucker. “Between a wave of foreclosures, rising rents and underbuilding of new homes, the housing market became much harder to crack into from 2006 to 2017.”

Things improved in 2018 and 2019, Tucker said. But then forward progress was halted by the combination of COVID, the resulting economic downturn, government lockdowns and social unrest.

“The sooner we can put the pandemic and 2020 recession behind us, the sooner access to housing can resume its expansion,” he said.

Those 5.7 million prospective households that have not occurred are the results of people either living with parents into adulthood, or doubling up with roommates instead of buying or renting a home on their own or with a partner.

Lower rates of household formation across the board may indicate the market is struggling to provide enough affordable homes overall, not necessarily that a shift in preferences among a particular group is causing the decline.

The mid-2000s financial collapse began a domino effect that saw a housing-price collapse in some areas, impacting the ability of many families to pass down wealth to their children. Young people who finished school around the late 2000s faced a soft job market and, in some cases, heavy debt burden, which can have long-lasting effects on a person’s finances and ability to start a new household.

These financial concerns have been compounded by housing-market dynamics. Construction was depressed for several years after the 2008-09 and even now remains low by historical standards – the country was building about three homes per 1,000 Americans per year in early 2020, compared to a historical average of almost four.

Some of the challenges holding back new construction include a shortage of buildable land and the financing to acquire it; shortages of labor, as job openings for construction workers remain unfilled; and permitting processes that add time and cost to the construction process.

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