Friday, August 24, 2007

Baby Boomers Inflate Real Estate Bubble?

Has the baby boomer generation contributed to the real estate bubble? You can be the judge in the charts below. It does appear single family home prices have broken an uptrend that has been in place since the early 1990's.

(click on charts for larger image)

single family home price chart August 2007Source: Chart of the Day

percent change in population by age chart: 200 to 2005
The U.S. Census Bureau published a report on population trends that contains a number of graphs detailing the shift in the baby boomers as they have aged.

If the boomers have contributed to real estate price inflation, it is important to answer the question of where will their impact be felt in the next decade or two.
  • What type of stocks will they prefer in retirement?
  • Will the demand for assisted living facilities increase?
  • What will be the impact on government programs and taxes?
There are many more issues to be considered; however, understanding the shift in the baby boomer population will likely be critical in determining future investments. I wrote a recent post, Baby Boomers Might Impact The Equity Markets, that addresses some of these issues as well.

Age and Sex Distribution in 2005 (pdf)
U.S. Census Bureau
July 1, 2005

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