CONFIDENCE IN BUYING DROPS
Only 21% of Americans think now is a good time to buy a home, according to October’s Fannie Mae Housing Survey.
This is down from 28% in September, and it shows that low rates do not drive purchase volume as much as many of us might suspect.
In response to this, I would again like to remind buyers about the pending “Biggest Housing Boom in History” that I blogged about a few weeks ago.
DEMOGRAPHICS DRIVE DEMAND AND PRICES – “LIKE A HAND IN A GLOVE”
Even more compelling, however, is the demographic data that Barry Habib illuminated last week on the National Real Estate Post.
I highly recommend watching the video from about 4 min, 30 seconds on b/c it is fascinating!!
Habib shows how our recent housing booms and busts correlate almost exactly to birth rates from 33 years earlier (b/c 33 years is the median first-time-buyer age).
Birth rates plummeted after 1973 b/c of Roe v Wade (legalized abortion) according to Habib, but I suspect the massive recession at the time also contributed to the decline.
In any case, Habib’s point is that “household formations” also plummeted 33 years later, exactly correlating with the 2006-2009 housing marketing collapse.
Habib acknowledges that many other factors contributed to the meltdown but plummeting household formations (and demand) contributed significantly to the meltdown too.
Habib then shows how birth rates started to climb after the mid-1970s and peaked around 1990.
And all of those circa 1990 babies are soon going to form households and buy homes.
BUT what is most interesting though is how birth rates correlate exactly to household formations, to housing demand and to housing prices.
The data fits “like a hand in a glove” according to Habib, and it is extremely compelling.
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