The crystal balls are out on the housing market, and Dowell Myers sees a dark age ahead. The big problem is all the housing stock owned by aging baby boomers, says Myers, professor at the University of Southern California School of Policy, Planning, and Development, and not enough homebuyers to soak up the supply once they try to sell in vast numbers. A saving grace would be immigrants, but tightened policies on immigration are diminishing their role.
As those born between 1946 and 1964 move into retirement, the “mouse moving through the python” will utterly change the ratio of seniors to working people, with profound implications for the economy, the workforce, tax policy, Social Security, Medicare, and the housing market. “The volume of homes that are going to be releasing is enormous,” he says, between now and 2050. “We need to bulk up the future generation of homebuyers,” by investing in education, particularly for neglected minority populations, and recognizing the economic power of the foreign-born, whose homeownership rates continue to grow. “The window of opportunity was at the end of the Bush administration,” says Myers. His book on the subject is Immigrants and Boomers: Forging a New Social Contract for the Future of America.
For the near term, housing prices are rebounding slightly in the “market clearing” process that has followed the bursting of the bubble that prompted the 2008 economic meltdown, says Karl “Chip” Case, economics professor at Wellesley College, and co-founder of the Case-Shiller Index. Prices have fallen 30 percent nationally over the last four years, and “sooner or later, that’s what’s going to bring people back.” The federal government is doing its part, buying $1.25 trillion in mortgages, extending the tax credit, keeping the federal funds rate near zero. “Housing remains a favored investment. It only takes a few optimists to move the market. We are getting back to the price income ratios we had in 2000,” Case says. Unemployment – 10.2 percent nationally and 16 million people out of work – remains a drag, however. California shows signs of life, prompting Case to remove the state from “FCAZN” – Florida, California, Arizona, and Nevada, which led the nation in steep 50 percent housing price declines. (He now includes Georgia in that group, creating the new acronym “FANG.”) Looking to the future, with the astonishing run-up in housing prices since the 80s behind us, Case agrees with Myers that “the big issue is what the baby boomers are going to do.”
Myers spoke at the gathering of Big City Planning Directors Nov. 15-17. Case addressed the New England Smart Growth Leadership Forum Nov. 20.