Bloomberg:….U.S. Home prices may be lost for a Generation…

[NotCranky]

[quote=patientrenter][quote=Russell]Bob,
We covered the baby boomer issue pretty well in the early days of this blog. I think most of us thought it is reasonable to think this could hurt future boom potential.[/quote]

Rus, I know you don’t usually want to get ‘pinned down’, but do you think that it’s more likely that home prices, indexed to average per capita income, will be higher in 20 years, or lower?

A true believer in the demographic driver theories of Dent would say lower. True believers in the power of the past 50 years to predict the future would say higher.

OK, buddy, whose side are ya’ on?[/quote]

I don’t have the academic basis on this topic to do anything but avoid getting pinned down :).

How does being in either camp affect the decision you make today?

I just see too many variables to make a choice that far out. The ratio could be academic. Could our standard of living go down,on average, with a result in either direction?

It is plausible that baby boomers will have attenuating effect on prosperity vis a vis real estate. Because of the liquidation of their assets and the expense involved in taking care of them in old age.

Besides any negative babyboomer effect I think our standard of living, to some degree, normalizes to the world’s standard because of globalization.There will always be an elite class for whom housing will not be a huge portion of their total wealth but this group won’t be defined within a national scope. This experience could be a process spanning much more than 20 years,of course. It certainly seems like it is well underway?

I still think it is most important for more average folk,like yours truly, to focus on the business cycle at hand and perhaps even have some confidence that good work within it,including hard nosed investing in real estate, will be rewarding.

[gandalf]

I completely agree with peterb and others. Things may hold together, dump trucks full of duct tape, stim-bucks and magik-fed-money, but the secular trends are clear: the US is in for a long, slow grind on the macroeconomic side.

Prices may in fact return to bubble levels in the next 10 years, but I imagine this would be supported largely by inflation / dollar devaluation. I’m expecting the real effects to be an eroding standard of living and loss of wealth, in addition to debt destruction which is required.

[gandalf]

I completely agree with peterb and others. Things may hold together, dump trucks full of duct tape, stim-bucks and magik-fed-money, but the secular trends are clear: the US is in for a long, slow grind on the macroeconomic side.

Prices may in fact return to bubble levels in the next 10 years, but I imagine this would be supported largely by inflation / dollar devaluation. I’m expecting the real effects to be an eroding standard of living and loss of wealth, in addition to debt destruction which is required.

[gandalf]

I completely agree with peterb and others. Things may hold together, dump trucks full of duct tape, stim-bucks and magik-fed-money, but the secular trends are clear: the US is in for a long, slow grind on the macroeconomic side.

Prices may in fact return to bubble levels in the next 10 years, but I imagine this would be supported largely by inflation / dollar devaluation. I’m expecting the real effects to be an eroding standard of living and loss of wealth, in addition to debt destruction which is required.

[gandalf]

I completely agree with peterb and others. Things may hold together, dump trucks full of duct tape, stim-bucks and magik-fed-money, but the secular trends are clear: the US is in for a long, slow grind on the macroeconomic side.

Prices may in fact return to bubble levels in the next 10 years, but I imagine this would be supported largely by inflation / dollar devaluation. I’m expecting the real effects to be an eroding standard of living and loss of wealth, in addition to debt destruction which is required.

[gandalf]

I completely agree with peterb and others. Things may hold together, dump trucks full of duct tape, stim-bucks and magik-fed-money, but the secular trends are clear: the US is in for a long, slow grind on the macroeconomic side.

Prices may in fact return to bubble levels in the next 10 years, but I imagine this would be supported largely by inflation / dollar devaluation. I’m expecting the real effects to be an eroding standard of living and loss of wealth, in addition to debt destruction which is required.

[peterb]

Baby Boomer’s will be trying to retire with all their assets down 50% or more from a year ago. How’s that gonna look? The biggest demographic in the country turning into net consumers from net producers, and they’re broke. Couple this with global wage arbitration and you’ve got a recipe for the macro economics to be a slow grind down for many years to come.

[peterb]

Baby Boomer’s will be trying to retire with all their assets down 50% or more from a year ago. How’s that gonna look? The biggest demographic in the country turning into net consumers from net producers, and they’re broke. Couple this with global wage arbitration and you’ve got a recipe for the macro economics to be a slow grind down for many years to come.

[peterb]

Baby Boomer’s will be trying to retire with all their assets down 50% or more from a year ago. How’s that gonna look? The biggest demographic in the country turning into net consumers from net producers, and they’re broke. Couple this with global wage arbitration and you’ve got a recipe for the macro economics to be a slow grind down for many years to come.

[peterb]

Baby Boomer’s will be trying to retire with all their assets down 50% or more from a year ago. How’s that gonna look? The biggest demographic in the country turning into net consumers from net producers, and they’re broke. Couple this with global wage arbitration and you’ve got a recipe for the macro economics to be a slow grind down for many years to come.

[peterb]

Baby Boomer’s will be trying to retire with all their assets down 50% or more from a year ago. How’s that gonna look? The biggest demographic in the country turning into net consumers from net producers, and they’re broke. Couple this with global wage arbitration and you’ve got a recipe for the macro economics to be a slow grind down for many years to come.

[poorgradstudent]

We must be near a bottom in the housing market. The contrarian indicators just keep piling on. Basically, when the main story in the media is “home prices will keep falling forever”, it’s a good hint that a recovery is nigh (similar to how many magazine covers were perma-bullish before the housing and stock market falls).

This is, of course, a dangerous time for anyone thinking of retiring in the next 3-odd years. But I was bothered by the article’s lack of a timeframe focus. There’s a glut of inventory right now, and this will take a while to work out of the system. But a boomer who bought their house in the 70s is still likely to be doing pretty well, unless they withdrew and spent all their equity.

Lumping SF, Phoenix and Vegas together is a little sloppy too. SF home prices will largely rebound when the recession ends, assuming you mean SF proper and not the outer suburbs. It’s the exurbs that may languish for a while; Phoenix and Vegas saw huge increases in sprawl during the boom, and convincing someone to live 40-45 minutes from downtown can be tough when there are much closer affordable options available.

The implication that Texas will keep growing forever also seems somewhat flawed. Texas is doing very well right now, but that doesn’t guarantee it will be 5-10 years from now.

I have sympathy for those who lost equity in their homes, but this is frankly a very exciting time to be a 30-year old non-homeowner. Affordability is getting better, and with medium-term housing market prices looking flat, there’s still time to save a proper down payment.

[poorgradstudent]

We must be near a bottom in the housing market. The contrarian indicators just keep piling on. Basically, when the main story in the media is “home prices will keep falling forever”, it’s a good hint that a recovery is nigh (similar to how many magazine covers were perma-bullish before the housing and stock market falls).

This is, of course, a dangerous time for anyone thinking of retiring in the next 3-odd years. But I was bothered by the article’s lack of a timeframe focus. There’s a glut of inventory right now, and this will take a while to work out of the system. But a boomer who bought their house in the 70s is still likely to be doing pretty well, unless they withdrew and spent all their equity.

Lumping SF, Phoenix and Vegas together is a little sloppy too. SF home prices will largely rebound when the recession ends, assuming you mean SF proper and not the outer suburbs. It’s the exurbs that may languish for a while; Phoenix and Vegas saw huge increases in sprawl during the boom, and convincing someone to live 40-45 minutes from downtown can be tough when there are much closer affordable options available.

The implication that Texas will keep growing forever also seems somewhat flawed. Texas is doing very well right now, but that doesn’t guarantee it will be 5-10 years from now.

I have sympathy for those who lost equity in their homes, but this is frankly a very exciting time to be a 30-year old non-homeowner. Affordability is getting better, and with medium-term housing market prices looking flat, there’s still time to save a proper down payment.

[poorgradstudent]

We must be near a bottom in the housing market. The contrarian indicators just keep piling on. Basically, when the main story in the media is “home prices will keep falling forever”, it’s a good hint that a recovery is nigh (similar to how many magazine covers were perma-bullish before the housing and stock market falls).

This is, of course, a dangerous time for anyone thinking of retiring in the next 3-odd years. But I was bothered by the article’s lack of a timeframe focus. There’s a glut of inventory right now, and this will take a while to work out of the system. But a boomer who bought their house in the 70s is still likely to be doing pretty well, unless they withdrew and spent all their equity.

Lumping SF, Phoenix and Vegas together is a little sloppy too. SF home prices will largely rebound when the recession ends, assuming you mean SF proper and not the outer suburbs. It’s the exurbs that may languish for a while; Phoenix and Vegas saw huge increases in sprawl during the boom, and convincing someone to live 40-45 minutes from downtown can be tough when there are much closer affordable options available.

The implication that Texas will keep growing forever also seems somewhat flawed. Texas is doing very well right now, but that doesn’t guarantee it will be 5-10 years from now.

I have sympathy for those who lost equity in their homes, but this is frankly a very exciting time to be a 30-year old non-homeowner. Affordability is getting better, and with medium-term housing market prices looking flat, there’s still time to save a proper down payment.

[poorgradstudent]

We must be near a bottom in the housing market. The contrarian indicators just keep piling on. Basically, when the main story in the media is “home prices will keep falling forever”, it’s a good hint that a recovery is nigh (similar to how many magazine covers were perma-bullish before the housing and stock market falls).

This is, of course, a dangerous time for anyone thinking of retiring in the next 3-odd years. But I was bothered by the article’s lack of a timeframe focus. There’s a glut of inventory right now, and this will take a while to work out of the system. But a boomer who bought their house in the 70s is still likely to be doing pretty well, unless they withdrew and spent all their equity.

Lumping SF, Phoenix and Vegas together is a little sloppy too. SF home prices will largely rebound when the recession ends, assuming you mean SF proper and not the outer suburbs. It’s the exurbs that may languish for a while; Phoenix and Vegas saw huge increases in sprawl during the boom, and convincing someone to live 40-45 minutes from downtown can be tough when there are much closer affordable options available.

The implication that Texas will keep growing forever also seems somewhat flawed. Texas is doing very well right now, but that doesn’t guarantee it will be 5-10 years from now.

I have sympathy for those who lost equity in their homes, but this is frankly a very exciting time to be a 30-year old non-homeowner. Affordability is getting better, and with medium-term housing market prices looking flat, there’s still time to save a proper down payment.

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