NOTE: Rates have been rising again on more oil market news. My Marketing Director, however, told me that I can’t blog about “the stupid oil markets” again. 😊 So, suffice it to say that oil market jitters (and inflation concerns) resulting from the Iran war continue to drive rates higher.
In 2023, I wrote this blog: 12 Housing Crashes In 11 Years! How Much More Can We Take?
In that article, I listed all the housing crash predictions (listed below) we’d seen over the previous 11 years and pointed out how few of them (aka none) had come to pass.
But now there is a new one: The Baby Boomer Bust.
I recently saw this on X: “The average life expectancy is 78. The average Baby Boomer is 75. Baby Boomers own 40% of the homes in America. Do the math and tell me a housing crash isn’t coming.”
The crash bros loved it, but sadly for the author of the post, people who understand statistics, markets, actuarial tables, and banana stands were not as friendly.
Reasons We Won’t See a Boomer Bust
- While life expectancy at birth is 78, the life expectancy for a 75-year-old homeowner is more like 90 and the life expectancy of homeowners in general is much longer.
- Not all homes of deceased boomers hit the market. Not even close, in fact, as many boomers leave their homes to their kids.
- The huge influx of immigrants we saw in recent years will absorb much of this inventory.
- When boomer men die, their wives (who are 4 years younger on average) stay in the house.
- Builders watch existing inventory trends before committing to building new homes, creating a natural adjustment mechanism.
- The other 9,000 crash predictions didn’t come true, so we should probably not hang our hat on this one…
Long story short: 2008 warped all of our brains, and we’re all still expecting a repeat that will never come until we see all of those unique conditions repeat, e.g. overbuilding, no lending standards, Fannie Mae creating an artificial market for subprime loans, government forcing banks to make bad loans to help with “affordability,” inept bond rating agencies, and crashing homebuyer demographics.
Crash Predictions That Failed From 2012 – Present
- 2012 – Shadow inventory (foreclosed homes held by banks) was going to flood the market
- 2013 – Higher mortgage rates were going to collapse homebuying demand
- 2014 – QE ending in October was going to push up rates and collapse demand
- 2015 – Manufacturing recession was going to collapse demand
- 2016 – Home prices got back to 2006 highs, so the bubble had to pop again
- 2017 – No good reason – but darn it, the market’s gonna crash!
- 2018 – 5% mortgage rates will crush demand and pop the new bubble
- 2019 – Home-price growth was cooling off
- 2020 – COVID-19 was going to crash everything, including housing demand
- 2021 – Mortgage forbearance surge was going to result in foreclosures that would flood the market
- 2022 – 7% mortgage rates were going to crush demand
- 2023 – Historically low housing demand was going to bring down the market (something we still hear)
