MetLife Agricultural Finance Forecasts U.S. Housing Starts to be 16 Percent Below Consensus, Reaching Only 1.5 Million by 2020

Millennial home purchasing behavior and changes in availability of
credit impacting forecast

U.S. timberland asset class provides attractive medium- to long-term
investment despite slower-than-expected recovery

NEW YORK–(BUSINESS WIRE)–The huge Millennial generation has not yet reached home-buying age and
credit remains tight, causing MetLife to predict that housing starts
will reach 1.5 million by 2020, 16 percent below consensus. The
resulting weakened demand for lumber will continue to weigh on pricing
and demand over the near term. However, emerging supply shortages will
bolster U.S. timberland investments, according to Millennials,
Housing, and the Timber Recovery
, a new study by MetLife
Agricultural Finance.

“We believe that the primary headwind to a fast recovery in housing
starts is that the homeownership rate will remain below the historical
average of 65 percent through 2020,” said Hugues Rinfret, director of
research, MetLife Agricultural Finance. “This is due to continued credit
availability constraints and its impact on 35-44 year-olds, as well as
the fact that 90 percent of the Millennial generation have not yet
reached age 31, the median age of first time home buyers.”

The U.S. lumber market is closely tied to U.S. housing starts.
Homeownership rates are at 36-year lows and, at the end of 2015, lumber
prices were nearly 20 percent below their 2004 peak. For the next five
years, lumber demand and pricing is expected to remain below the
historical average. However, according to the study there is a positive
outlook for lumber demand over the medium and long term. This is in
light of the expectation that Millennials will eventually purchase
single-family homes in greater numbers, coupled with the emergence of
non-housing demand drivers.

The study also finds that:

  • Timberland values have been surprisingly resilient, despite low
    timber prices.
    More than a decade of low interest rates and the
    more than 30-year timberland investment time horizon explain the
    resilience in timberland values. Over thirty funds currently manage
    more than $57 billion of timberland assets for investors who cite the
    long term investment horizon, low correlation with the general
    economy, biological growth regardless of economic conditions, and a
    relatively stable stream of cash flows as appealing characteristics of
    the asset class.
  • Despite short-term headwinds, the long-term outlook for U.S.
    timberlands as an asset class is positive.
    A slowdown in the
    annual acreage growth of planted forests, supply issues in British
    Columbia, Canada, and new global demand drivers suggest the potential
    for a growing timber supply deficit. MetLife Agricultural Finance
    believes that the U.S. timberland asset class is particularly well
    positioned to meet the world’s increased demand for wood and wood
    fiber, making investments in this sector attractive for investors with
    long-term horizons.

A copy of the study is available upon request.

About MetLife Agricultural Finance

MetLife Agricultural Finance oversees an agricultural portfolio
consisting primarily of mortgages for farms, ranches, food production,
agribusiness and timberland. MetLife has provided agricultural financing
solutions since 1917, and is one of the largest agricultural mortgage
lenders in North America. MetLife has agricultural investments offices
in Fresno, Calif., Overland Park, Kan., Memphis, Tenn., and a consulting
office in Sao Paulo, Brazil.

About MetLife

MetLife, Inc. (NYSE: MET), through its subsidiaries and affiliates
(“MetLife”), is one of the largest life insurance companies in the
world. Founded in 1868, MetLife is a global provider of life insurance,
annuities, employee benefits and asset management. Serving approximately
100 million customers, MetLife has operations in nearly 50 countries and
holds leading market positions in the United States, Japan, Latin
America, Asia, Europe and the Middle East. For more information, visit


MetLife, Inc.
John Calagna, 212-578-6252