Posted on 11/26/2009 9:16:57 AM PST by wardaddy
I think you’re right that there is a point at which the glut of housing makes house prices go so low that more low-earners *can* buy houses.
However, in the meantime, the death of the baby boomers means a huge increase in vacant, unsellable properties over time.
For one thing, many of these homes will not be in locations or modern enough for people who have money to buy one of the millions of other, probably newer homes on the market.
Secondly, many young people starting out will make so little, if they even get jobs, they won’t be able to save up downpayments which (hopefully) will be required as credit standards return to more sensible parameters -— regardless of the home’s price.
At the same time, as we are starting to see now, the glut in homes for sale will lead to cheaper and cheaper rents. Renting, rather than buying, possibly will become more the norm.
Home ownership won’t be a simple question of affordability (as realtors like to say). I think the whole idea of having a bunch of money sunk into a house, and being tied there if it can’t be easily sold, yet one loses one’s job or whatever, will not be as blithely accepted in the future.
Also, I don’t think we can assume that house prices can fall and fall indefinitely, while everyone’s financial status stays relatively the same. IOW, the worse the housing market is, the worse the economy will be -— therefore, the worse wages will be and so on.
But, yes, if affordability is the only factor, more houses = more affordability.
P.S. I’m also thinking there probably won’t be as many “young couples” starting out as there as boomers dying for a while?
you’re right which is why most ads target 18-55
the Gold Standard
In my opinion, you seem to be forgetting that most boomers have children, often larger than the current 2 kid families, and that many of these adult children could never afford a home and are anxious to inherit their parent’s home. If mom’s home is local, they can move into it. If not, they can rent it out or sell it for the downpayment to buy a home locally.
It seems to me you think that a deceased boomer = vacant home. With all of their children waiting to inherit, I don’t think the glut from the demographic shift will be as dramatic as you seem to think
Look around at your own family, friends and neighbors. Dig a little and I think you will begin to realize how many of the boomers children don’t have homes and will inherit one. That is how I see it.
Interesting perspective, and if that’s what you see, that’s a factor.
But I look around and don’t see anyone who can’t wait to inherit a home or who would really want to move into their parent’s home if they did inherit it. Most have gotten their lives on their own track by the time their last parent’s home becomes vacant.
And I know a couple of people personally who, although there are several children and grandchildren in the boomer’s family, no one wants the boomer’s home, yet they can’t sell it in this market.
In fact, I personally know one family where “mom’s home” is a burden, precisely because they can’t seem to sell it at any price, nor rent it, yet it has taxes,association fees, insurance and upkeep that the kids have to pay.
So I guess it just depends on WHERE you are.
You’re right that a deceased boomer doesn’t necessarily mean a vacant home. But it does mean one more home on the market, either because it’s directly on the market or because a family member moves into it rather than possibly buying another home on the market.
Even if this doesn’t create a “dramatic” glut of houses in and of itself, it certainly adds exponentially to the decade-long glut we are already facing!
You have good points. I don’t want to pretend that the demographic shift will cause more housing inventory at the worst possible time. You are perfectly right in that regard. It sure won’t help people feel good about depressed house values any time soon. It should help reduce house prices lower and longer which will be beneficial to those who want to buy a home. It will no longer be about no money down option ARMs. Lower prices will make houses more affordable than they are today. That will help a lot of people.
I don’t see the value in houses being expensive. I don’t see it as a good thing to strive for. It is just shelter. The more people who buy a house and pay property taxes and anchor in to their communities, the better. Renters don’t tend to show the same concern for their communities that owners do. Owners understand property rights somewhat better than buyers do.
We will see what happens. I’m not worried about low house prices. I think affordable housing is a good thing. I think it is good to make people think of houses in shelter terms again, and not as some retirement plan or get-rich-quick scheme.
You make good points. I agree with you.
Same here. I agree with your points!
BM
Does anyone have an email so this can be forwarded to CalPERS and maybe the #1 & #2 leaders of California government. Tough times ahead.
I would recommend the Milk of Magnesia new half dose...works great if that is what you desire.
cherry flavored too...better than that old chalky crap
FYI.. Denninger has a writeup on this thread
http://market-ticker.org/archives/1673-They-Arent-Really-This-Stupid,-Are-They.html
site down..lol...given the title...doesn’t look complimentary
Yeah.. I noticed it was down earlier this morning but it seems to be back now. The writeup is very well spoken. Denninger is one of the good guys.
nice..thanks for turning me on to this guy...I will try to keep up.
There are in fact generational opportunities in real estate today, to borrow long at low rates and buy up distressed properties, utterly ignoring the current cash flow. No it isn't "hiding" anything for that to be acknowledged all around the table. The present state of demand is the temporary variable that won't be sustained. Sure a speculator wants another leg down to buy lower; tough toenails. There are in fact more deals out there than all of them combined care to take up, already at distressed prices.
Overall, the article is a piece of group think idiocy staring in the rear view mirror of the last quarter or two. Instead of trying to time every bottom (did he get into bonds last December? Get into stocks in March? Didn't think so...), just negotiate the price. Waiting around for other people to tell you which way prices will move is stupid. Just go bid what the price ought to be.
Oh, you don't know that? Then crap about "80% of this price adjustment" and 75% of that one, is crap...
Here’s the discussion on that column:
In it, he claims he’s got confirmation on the content from someone who was at the meeting (Denninger posts there as “Genesis”).
Good luck on “keeping up”. He (Denninger) almost writes faster than I can read.
Ping.
Thank you looks about right if you actually pay attention rather then follow the propaganda of the mainstream news!
Nice. Thank you for posting this.
> LIMITED GOVERNMENT.
Are you planning on breaking up the too-big-to-fail banks before or after you magically limit government?
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