Deflating Bubbles, and Tanking Markets
Okay, so let’s say our reader, who commented on my last entry, is right. Wes said that:
"We will have a number of months (18?) where the numbers show close to 0% appreciation, before finally going truly negative and doing the needed correction before returning to positive levels (2009-2010?)... I expect a full generation of investors will be scarred from the aftermath of this bubble."
I can imagine a pretty grim scenario for the residential property market if this reader’s prediction is right. I'm not so sure we can expect such a healthy rebound in 2010. That year, the youngest of the baby boomers will be 46, the oldest 64. They will likely begin to think about cashing out and the selling the homes where they raised their children. I know I’m already thinking along those lines and I’m only 45.
In 1997, there was a baby boomlet. There were the most number of children born since the last year of the baby boom in 1964. In 2014, those kids will be going off the college, and their parents (read: me) will no longer want to pay the exorbitant property taxes to support their local school districts. They will be looking to sell their homes and move to those up-in-coming active communities for residents 55 and older. The result? A glut of single family homes and then tanking prices. I wonder if this deflating real estate market might last longer than anyone expects?