What Housing Bubble?

When I was in school at the University of Vermont, I was an economics major. I thought it would be a good idea to do some non required reading, and I came across the book Boomernomics: The Future of Your Money in the Upcomming Generational Warfare. This was right around '99 when Social Security was the hot topic. The book absolutely facinated me. Of course I knew who the Baby Boomers were, but I had never really paid the subject that much consideration.

The birthratechart ( http://en.wikipedia.org/wiki/Image:Birthratechart.png ) really helps get some insight to what we're dealing with. You can clearly see the spike in births starting in 1945 and continuing through until the mid 60's that produced about 76 million Americans. The decline through the 70's, then the echo boom starting in the late 70's early 80's as the boomers started having children of their own.

Right now, the oldest Baby Boomers are just barely in their 60's. Now lets really think about this one. This means that means that a huge chunk of the population is currently in their highest income producing ages as their mortgages are close to (if not already) paid off, their kids are no longer dependents, and most likely are also cashing in on their inheritances from their recently departed parents.

Now at the same time, we have the begining of the echo boom that is just entering into the housing market. Someone who was born in the beginning of the echo boom would just be entering their mid/late 20's. Assuming that everyone buys a home after they graduate college, right now we're roughly only halfway through the 72 million echo boomers purchasing of new homes. Now, since I believe average age of a first time home buyer to be a few years above 21, we still have a large portion of the population that has yet to buy their first home. Now on top of all that, don't forget that these birthrates do not include any immigrant population increases, which has also been greatly increasing in the last few decades.

So what can we expect based on this info?

Real Estate Agents - Good news! Once the boomers start to retire, odds are they are going to be moving somewhere else. Expect to see some more volume.

Suburbs - Not such great news. With the "baby bust" entering into family mode, there might not be enough sheer numbers taking over the vacancy of the departing boomers.

Cities - Goodish news. Look forward to the Echo Boomers continuing to move towards a more Urban environment as they begin their careers.

The year 2018 - Dear god this could be a bad one. It's either diaper time or the expiration date for boomers. As they begin to stop being able to care for themselves, or simply expire. Flat out, this will not be a good time for housing prices.