One thing I learned from Chris Ertel at GBN was the important role of demographics in scenarios. Demographic changes are “locked in” factors, but usually not understood because people don’t look for them or appreciate their significance. This link between baby boomers and real estate has been locked in for 50 years…
(via SF Chron) Aging Boomers could burst housing bubble
The common perception among economists is that the current housing bubble will be a relatively short-term affair that should see a return to normal within the next few years.
But according to a study by two University of Southern California researchers, a bubble of even more monumental proportions lies just ahead. They call it the “generational housing bubble,” and maintain that it will be fueled by the same Baby Boomers who have been bidding up prices since 1970 as they moved higher and higher on the housing ladder.
Now, though, the 78 million Boomers are about to enter the years when people tend to become sellers rather than buyers. And as a result, they expect “many more homes (will be) available for sale than there are buyers for them.”
According to the researchers, the tilt toward age groups that are net sellers of housing is unprecedented. “The Baby Boom generation was born over a period of 18 years, and once its sell-off commences, it could dominate the housing market for up to two decades,” they say. (…)