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Not Even Gen Y Can Save the Housing Market Now


Millennials might finally be ready to retire their hipster ways and join the American suburban bourgeoisie.  Sixty-five percent of Gen Y renters (18-34) have a stronger intention to buy a house now than they did this time last year, according to a new study by PulteGroup. This figure has some people excited about the housing market’s future, as Yahoo news reports:

There are around 90 million millennials living in the United States, making them the largest demographic group in the county’s history—an onslaught of this group into the housing industry could create a boom larger than anything the U.S. has ever seen before.

The figure is encouraging, if not terribly surprising. The dream of owning a house with a big lawn and a white picket fence has been popular for a reason. Even with the rise of renting, over the long term people still want the same things: safety, good schools, and room for their kids to play. Thankfully, Gen Y is finally thinking seriously about acting on these latent desires, just in time to give the housing market a shot in the arm.

Unfortunately, there is still a serious problem. Even if many more young adults act on their intentions to buy a house, there will still be far more houses on the market than buyers. As America has aged, there are now fewer young people looking to buy homes and more old people wanting to sell them. This has lead some experts to predict that by 2030 there will be half a million more houses for sale than there are households looking to buy. And a short but explosive post at Business Insider has graphs showing how housing prices across the whole world fall dramatically as populations age.

The American dream is still alive for the next generation, but the housing market isn’t out of the woods. Boomers may get less than they hoped when they sell, but on the other hand Gen Y may be able to pick up some bargains.

[Image of Suburban Street Courtesy of Shutterstock]

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  • rheddles

    Don’t forget that many of those Gen Yers are encumbered by their student debt, significantly reducing the size of the mortgage for which they can qualify. Their best hope is to inherit a lot from their boomer parents (ha ha). The H1-B holders are much more likely to be able to afford to buy the inflated house from the boomer. So we should expand H1-Bs.

    • qx4b

      Yes, when public policy choices price an entire generation out of the housing market, rather than letting boomers take the hit for once and allow the market to equalize, we should just open up the market to new buyers who haven’t had the chance to get screwed by boomers yet! It’s not like public policy could possibly exist for any other reason…

  • Stephen

    A buyer’s market: good news for a generation, and those to follow, that Boomers have saddled with enormous structural debt. Karma comes in the falling value of equity as a consequence of feckless policy. However, not good news for an economy that for too long has been overly dependent on the housing sector.

    • Happycrow

      What we have now is a bloated monstrosity of a market with artificially-high prices. Good for the economy, too — dependence on artificial asset bubbles is not real economic growth. Let’s get the economy off heroin and the kids in houses.

      -Russ in TX

  • Parker O’Brien

    There is an issue with the theory that boomers downsizing
    their homes will slacken demand in the housing market. Housing demand, at its
    core, is based on demographics. Boomers downsizing their homes does not change
    the underlying demographics of population vs. residences. People will still
    need a place to live, so the only ‘detriment’ to the housing market would be to
    increase demand on smaller, less expensive homes (putting upward pressure on
    those prices) and less demand on the larger homes, which puts downward pressure
    on more expensive homes. The individual markets will adjust accordingly, but
    the overall price of housing should remain largely unaffected. The one real
    issue with the housing market are the Fed’s manipulations. Once the pump is
    stopped, it will kill housing. Loan rates will rise pricing potential buyers
    out of markets and cash investors, who have been leading the current recovery,
    will chase better yields in other markets. Long term housing will be fine, but
    expect a bumpy ride for the next decade or so.

    • Jim Luebke

      Hasn’t the “downsizing” theory been blown out of the water by studies showing elderly people in this country tend to “age in place”?

  • Jim Luebke

    Don’t worry. Our government will just come up with an obnoxiously wealth-destroying Cash for Clunkers type program, which gives people money to destroy houses deemed Politically Undesirable — too large, too comfortable, inconvenient to urban planners, standing in the right-of-way of a high speed rail project, not “green” enough, too supportive of traditional families, that kind of thing.

    That way, Gen Y’ers will be stuffed back into the rabbit hutches and rat hives that are beloved of Leftists.

    Why would any properly enlightened person ever want to live in more space than a (shared) college dorm room? Unimaginable!

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