It might get a lot worse
This article in the Boston Globe is scary. Says lots of boomers need to cash in their homes for retirement and will be in for a shock. Namely, no buyers.
THE REAL ESTATE GENERATION GAP
A perfect storm could be brewing. A housing downturn that normally wouldn't bottom out until 2014 or so anyway. Add to this boomers needing to unload their McMansions. Plus the headlines this weekend about "light stagflation?
All I can say is Yikes. The more I read, the less I want to buy into this bloated housing market. Buy low, sell high.
THE REAL ESTATE GENERATION GAP
A perfect storm could be brewing. A housing downturn that normally wouldn't bottom out until 2014 or so anyway. Add to this boomers needing to unload their McMansions. Plus the headlines this weekend about "light stagflation?
All I can say is Yikes. The more I read, the less I want to buy into this bloated housing market. Buy low, sell high.
Comments
One thing in this article that caught my eye was the spot where the author points out that there simply aren't enough people to willing and able to buy these homes, even if there was 100% demand, owing to the large number of baby boomers.
You can see this chart for the nation as a whole. Looks like the boomer bubble starts now, but really hits hard in 2020. By 2050, the largest group of Americans will be over 80 years old:
http://www.nationmaster.com/country/us/Age_distribution
Its not like the baby boom is a pig in the snake that has to be digested - US population continues to grow. I'd call this one alarmist
"Generation X, a.k.a. the baby bust, is largely uninterested in sprawling suburban homes. And there aren't nearly as many Xers as there are boomers. There just won't be enough potential buyers unless the Xers and the older members of Generation Y are joined by a flood of new immigrants who both want the boomers' houses and are able to pay for them. If that doesn't happen, prices at the high end will sink. "
"Gen Y" is about as big as the baby boom. When they come of age, they might be "largely uninterested in sprawling suburban homes" but then I doubt they will be so special or wealthy that they all get new homes built just for them wherever they like. It will probably mean the start of another boom, just as I get ready to retire. :>) If you think about the boomer and boomlet cohorts, you can make a lot of money betting on the right companies (think Disney in the late 80's/early 90's)
Here's an article
Echo Boom
(CBS) If you've ever wondered why corporate America, Hollywood, Madison Avenue and the media all seem obsessed with the youth culture, the answer is simple.
The largest generation of young people since the '60s is beginning to come of age. They're called "echo boomers" because they're the genetic offspring and demographic echo of their parents, the baby boomers.
Born between 1982 and 1995, there are nearly 80 million of them, and they're already having a huge impact on entire segments of the economy. And as the population ages, they will be become the next dominant generation of Americans.
Who are they? What do they want? As Correspondent Steve Kroft first reported last October, you'll be surprised.
The oldest are barely out of college, and the youngest are still in grade school.
And whether you call them "echo boomers," "Generation Y" or "millennials," they already make up nearly a third of the U.S. population, and already spend $170 billion a year of their own and their parents' money
It seems to me that the ebbs and flows of the RE market are not driven by owners upsizing or downsizing; but rather by people buying for investment. Like the stock market, there are many that jump on the bandwagon when things are going gangbusters, and many flee when the bottom is falling out.
Even if the bottom falls out of the market over the next few years, eventually the market will go the other way.
From the NAR, for what it's worth:
Twenty-two percent of all homes purchased last year were for investment, down from a 28 percent market share in 2005, while another 14 percent were vacation homes, up from a 12 percent share in 2005.
David Lereah, NAR’s chief economist, noted the drop in investment homes was much greater than the decline in primary residence sales. “We expected the drop in investment sales because speculators left the market in 2006, which caused investment sales to fall much faster than the primary market, but the rise in vacation-home sales is based on strong demographic and lifestyle factors, with only modest interest in renting their properties to others,” Lereah said.
That figures. Vacation/retirement property is selling at a deep discount a relative to Seattle. Like, sunny Spokane.
http://money.cnn.com/2007/04/09/real_es ... /index.htm