Household formation should be the most critical variable for any housing model given that it measures incremental demand for shelter and in the absence of available vacancies should determine the amount of new construction that is necessary. Unfortunately, analysts and investors are primarily dependent on various surveys conducted by the Census Bureau to quantify this essential data point and are often left more confused than enlightened in the short run. We instead analyze electric customer counts, population growth, headship rates, employment, immigration and deaths in conjunction with our proprietary industry surveys and other third-party information to estimate the intersection of demand, new construction supply and vacancy rates.
