Unlike Japan, the US is not plunging into a multigenerational black hole. After the 80 million baby boomers are long gone, and 65 million Gen Xer’s have picked up homes at rock bottom prices, they will be followed by 85 millennials, those who are now in their early twenties. When this generation reaches its peak spending years, starting around 2022, they will have to chase the limited housing stock offered for sale by the Gen Xer’s.
As there will be a shortfall of 20 million homes, this should spark one of the greatest bull markets in residential real estate of all time. Furthermore, there will also be a severe labor shortage in America, leading to soaring wages and a reversal of a then 40 year long decline in American standards of living. We could see the return of a golden age similar to what we last saw in the 1950’s. So use the next leg down in residential real estate triggered by the next recession and the crash of 2013 to pick up a home at a knocked down, distressed price. It could mark a century low in real house prices
Poor Demographics is Why the US Market Can’t Break Out to the Upside