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Opinion, commentary and analysis on everything that makes the U.S. housing economy tick -- not to mention the ghosts in the machine, too. Written by HW's team of editors and reporters each business day.

Don’t expect the baby boomers to bail out the housing market

It's who follows them that matters...

August 21, 2013

As the Baby Boomers head into their golden years, it’s clear this generation has rightfully earned its reputation as the “change agents" of America.

From the economy to politics, the children of the ‘greatest generation’ managed to shape the global marketplace for the past three decades.

But if you’re counting on them to save housing – given their higher levels of wealth – think again.

If anything, market analysts are worried the end of the Baby Boom era is a potential death knell for housing – or at least for the housing market as we’ve known it.

The Washington Post recently sounded the warning alarm, citing a report from David Versel of the Center for Regional Analysis at George Mason University.

From Versel’s perspective, the millennial generation is filling in Washington D.C.’s urban areas.

While this is good news, he fears a sell-off of more traditional suburban homes owned by boomers in the D.C. region could create a market imbalance, where housing supply far outpaces demand.

As the Millenial generation (1980-to-2000) shifts to more interactive, urban communities in parts of the country, boomers may be looking to downsize or stay in place. But if there is noone to acquire their properties, the market may undergo a seismic shift.

The Washington Post cites Versel as saying:

 “You have all this inventory that’s going to turn over for the first time in a generation, and nobody knows if there’s sufficient demand to fill that inventory."

But the consensus is noone really knows where we’re going until we get there.

The larger macroeconomic question is whether the next two generations, Gen X and the Millenials, will obtain the job security and income levels needed to buy from the boomers or purchase new homes.

Without that question answered, the rest remains a mystery.

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