Friday, January 25, 2008

Generational Housing Bubble on the Way

clipped from www.economist.com
IN THE first years of the 21st century, no area of the American economy has excited more emotion than the property market.
America should be bracing itself for the end of the “generational housing bubble”, according to a new study by Dowell Myers and SungHo Ryu of the University of Southern California
The old sell more homes than they buy, according to data covering 1995-2000 (see chart).
The ratio of old to working-age people is expected to grow by 67% over the next two decades.
Young adults make up the bulk of new demand, with most purchasing homes when they reach their early 30s.
The flood of elderly people selling their homes
may lead to a drawn-out buyers' market. Prices may fall further as younger people, perceiving a downturn, delay purchasing.
The mismatch between buyers and sellers may be most acute in the rustbelt, where numbers of young people and immigrants are rising slowly, if at all, says William Frey of the Brookings Institution, a think-tank.
House Bubble
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