Previous posts in this series:
I still haven’t been able to nail down definitive proof for the claim that forms the title of this post but I think it falls well within the realm of reasonable inference. Consider the graph above, sampled from the invaluable blog Calculated Risk which was largely founded to report on the impending collapse of the housing bubble and whose reporting on that subject has been the best around.
As you can see the highest rate of homeownership is among those in the 46 to 64 age group. Further, when you multiply that rate of homeownership by the proportion of the population it represents cf. here, it’s apparent how large a proportion of all homeownership that comprises. I recognize that I’m doing a certain amount of handwaving here but researching this is hard and I’m writing a blog post not a doctoral dissertation.
Also consider this graph (thanks to Barry Ritholtz of The Big Picture).
As you can see it shows a very sharp increase in the value of household real estate (and mortgage indebtedness) as a percentage of GDP from 1976 to 2006. Coincidentally, this also represents the peak buying years of those born between 1946 and 1964, the Baby Boomers. That end date, 2006, is important and I’ll get back to it in a later post.
What has boosted home sales in recent years? According to Calculated Risk these were the most significant factors:
The turnover rate was boosted in recent years by:
- Speculative buying (flippers).
- Speculative buying by first time home buyers (using excessive leverage).
- Move up buying, especially by Baby Boomers.
- and recently by investors / first time buyers buying REOs.
The majority of subprime borrowers were Baby Boomers (nearly three quarters were white and a majority had incomes over the median). Baby Boomers are in significantly more debt than older or younger age groups. That’s referred to as the “cycle of purchasing” by some. Is it? Or does it just represent the life cycle of those born from 1946 to 1964? And it’s the period we’ve got the best data for.
Next post in the series: “The Breakdown: Age and Employment”