The 78.2 million-strong-Baby Boomers who pushed the housing boom of the mid-80’s purchasing boxy four- or five-bedroom houses will begin downsizing in favor of much smaller and efficient two or three-bedroom condos. As this happens, the move will leave a huge inventory of homes for sale, driving down the price of available housing for Generation X, the “baby busters” who showed up in a time of greatly reduced birth rates between 1965 and 1980. And with only 44 million members, they are also less wealthy and traditionally carry much more debt than the preceding generation or the Generation Y (.net Generation) that followed. Economists say such disparity in population between the Boomers and Gen X is leading the U.S. into an economic slowdown as Boomers spend less and Gen X keeps itself free to move where the jobs are, behaving as tenants and not giving up the freedom of mobility in exchange for putting down roots or the conjoining comfort therein.
ft take: It is important for our readers to keep in mind the demographics of real estate, as such figures are the destiny of their livelihood, and thus the magnitude of your income for the years (20) to come. The Bloomberg assessment of home buying age brackets lays down the past and current impact demographics have on real estate sales. Boomers bought big in 1985 and are just beginning to sell (both real estate and stocks); the phantom generation of Gen X has passed the big 3-0 of first time buyer status, are less affluent than their parents were at this age and also lack sufficient numbers to influence sales volume during the next seven years as we pull out of what will be a long California real estate recession.
What was not mentioned in the article is the good stuff: The Boomers had children (Generation Y) who, by way of being more community-minded, are focused on togetherness, congeniality and camaraderie which shapes them as aggressive participants in neighborhood building, etc. All of these are perfect ingredients for home ownership. However, they will not come of first time home buying age for another four or five years and then peak out in purchase intensity in 2017 or 2018. Further, they are not in numbers nearly as large as Boomers were in the 80’s, a reality which will keep homebuilding at a minimum for the next 15 years. But then there is the “Wall Street Gang” who could forget their present mistakes in the next decade and get a taste for real estate, sending us into an even greater roller coaster ride than we have just endured.
[See first tuesday article “Home sales volume and price peaks”]
Re: “U.S. Home Prices May Be Lost for a Generation” from Bloomberg