Courtesy of Mish.
Boomer demographics and postponement of marriage on account of student debt and poor finances are two of the key reasons that I long-ago stated the housing recovery would be slow for a decade.
Declining birthrates now show that is indeed what is happening.
First, please consider a short snip from my July 25 post “Actual” New Home Sales First 6 Months of 2012 vs. Prior Years; Reflections on the Housing Recovery
Reflections on the Housing Recovery
Even with today’s reported decline, new home sales have likely bottomed on an annual, cumulative-total basis.
However, don’t expect much in terms of recovery.
Debt overhang is immense, and student debt is particularly problematic. Lack of jobs coupled with high student debt is capping family formation. Kids out of college are deep in debt and holding off getting married, starting families, and therefore buying houses.Moreover, home sizes will trend lower and price recovery will be anemic because of boomer demographics. Retired boomers looking to downsize have few buyers able or willing to buy.
Bank-owned real estate (REOs) and shadow inventory are hugely underestimated. That too will pressure prices and sales.
The good news is home sales will add to GDP.
The more realistic news is structural headwinds are immense, demographics are poor, and job prospects for college graduates are poor. The bottom in new home sales may be in, just don’t expect anything close to a normal housing-led recovery, because it’s not going to happen.
Twenty-Somethings Postpone Having Babies
USA Today picked up on that theme in their article Americans put off having babies amid poor economy
Twenty-somethings who postponed having babies because of the poor economy are still hesitant to jump in to parenthood — an unexpected consequence that has dropped the USA’s birthrate to its lowest point in 25 years….
