Replies

1.The baby boomers are done buying houses to raise their kids in.

Don't their kids need to buy houses to in turn raise their kids in ? Or are they going to rent for the rest of their lives ?

Part of the recent runup in prices was due to bubble behavior in lending, and due to Mexican illegals buying houses on no-doc lending, and people buying houses on spec.

Once the prices come down to a more reasonable level, won't the following people start buying ?

A) Legal Immigrants

B) Those who have been saving to buy a house

C) Foreigners with cash

Don't their kids need to buy houses to in turn raise their kids in ? Or are they going to rent for the rest of their lives ?

IF they have children they could live in mom and dad's house or live in all the houses about to empty out by the dying boomers and elderly.

Once the prices come down to a more reasonable level, won't the following people start buying ? A) Legal Immigrants B) Those who have been saving to buy a house C) Foreigners with cash

Not nearly enough of those to keep the market rising.

Don't their kids need to buy houses to in turn raise their kids in ? Or are they going to rent for the rest of their lives ?

If it keeps them out of bankruptcy, why not rent?

If you can only afford the price of a house by stretching your budget to barely make "interest only" payments, you are FAR worse off than you would be renting. Renting at a reasonable price is not a disaster waiting to happen like buying at a price you can only afford with gimmick loans.

If you want to buy my San Diego, CA rental house at current Bubble prices and pay three times more in mortgage payments than you would pay me in rent, let's make deal!!

Once the prices come down to a more reasonable level, won't the following people start buying ?

True.

The problem is that you are advising people to buy those houses BEFORE they have come back down to the pre-Lending Bubble insanity prices. Those prices were prices that people could afford paying principal PLUS interest without going bankrupt.

You are advising people to catch a falling knife.

I will try to respond to your points. First, note that I am just bringing up additional points to consider.

Let's just say that telling you exactly how the real estate market will go, is "above my pay grade" to coin a phrase.

Look at this chart (numbers are from 2000):

See the 2 longest segments for male and female? That is the baby boomers (roughly). Now add 8 years to each range, and that gives you an idea of how old the largest 2 segments of the population are.

On the point you raise about kids needing to buy houses, the answer is that those "kids" are not having children as early, nor in as great a number, as the boomers. So they need less house.

Your point about houses coming down to a reasonable level is accurate, however, what I pointed out was that some houses were bought on spec, that is, the person buying the house, already had a house to live in and bought a second one, hoping to hold it for only a brief period of time before selling it at a profit. That creates an excess of houses for people to actually live in.

1.The baby boomers are done buying houses to raise their kids in.

Don't their kids need to buy houses to in turn raise their kids in ? Or are they going to rent for the rest of their lives ?

One in five US women remain childless in life (pops). There may not be a need for as many houses.

Part of the recent runup in prices was due to bubble behavior in lending, and due to Mexican illegals buying houses on no-doc lending, and people buying houses on spec.

Once the prices come down to a more reasonable level, won't the following people start buying?

A) Legal Immigrants

Maybe, but they will not be able to do it with liar loans, "no money down" deals, crazy ARMs, or anything like that. Expect the mortgage market to tighten and that alone will keep a lot of people out of houses. Which is how it should be.

B) Those who have been saving to buy a house

Those people should be able to buy houses assuming they have good credit.

C) Foreigners with cash

I don't know. If you mean "for investment", do foreigners buy houses as opposed to commercial real estate?