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Who will the boomers sell their homes to?


               
2012 Nov 28, 1:08am   29,191 views  79 comments

by Goran_K   follow (4)  

Over half of new college grads unemployed and in heavy debt
http://www.americanthinker.com/2012/11/approaching_crunch_time_on_the_student_loan_debacle.html

The FY 2009 three-year default rates -- which the Department views as more indicative of ultimate defaults -- was 13.4%, essentially the same as the 13.8% for the FY 2008 cohort. In private non-profit institutions, the three-year default rate was 7.5%, at public institutions it was 11%, and at private for-profit colleges it hit 22.7%.
There were 218 schools that actually managed to produce students who had three-year default rates of over 30%, and 37 schools that had rates over 40%!
As bad as these stats are, remember that they do not count borrowers who were allowed to postpone payments due to unemployment or other hardships.
Given that over half of all recent college grads are unemployed (or employed only at jobs not requiring a college education), we can expect those default rates to rapidly rise.

Also take into account median household debt is STILL twice as much as it was in 2002-2003, and that's after years of loan mods, refinancing, etc.

High debt.
No job prospects.
Possible bad credit from default.

Will this generation actually be able to buy homes anytime soon?

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1   Goran_K   @   2012 Nov 28, 1:32am  

http://finance.fortune.cnn.com/2012/11/27/first-time-homebuyers-housing-market/?section=money_topstories&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+rss%2Fmoney_topstories+(Top+Stories)

Where have they gone?

In October, the share of buyers purchasing their first home dropped to 34.7%, the lowest point in at least three years, according to a survey of real estate agents. This compares with 37.1% in June and the 40% range it has historically hovered around.

2   bmwman91   @   2012 Nov 28, 1:40am  

Goran, it depends on the region.

In coastal CA, they can sell to wealthy immigrants, flippers and plenty of the BB's kids that DO have high paying jobs. If housing inventories stay super low, then there will be enough people with money to pay the silly premiums that are now being commanded. Not ALL of the BB's kids are broke and living in the basement. In fact, a lot of the high-earning ones happen to live in coastal CA. With super low inventories, you don't need hordes of monied people, anyway.

As for the rest of the country, well, there is probably more reason for concern on this front. The Baby Boom was ~20 years long though, so there is about that much time for them to unload their properties, too. Per the US census, there are 77.3 million BBs. If they, nominally, have one house that they are going to sell over the next 20 years, that is ~3.9M houses per year, which would approximately double the current sales volume. The BBs are just starting to hit retirement age, and it will probably be delayed for many of them. Assuming sales volumes remain about how they are today, plus the BB's houses, we might get back to historically normal volumes. I am not expecting a flood of houses to come crashing prices down, personally.

3   Goran_K   @   2012 Nov 28, 1:46am  

bmwman91 says

The BBs are just starting to hit retirement age, and it will probably be delayed for many of them.

Yes, 60% of boobers believe they will work into their 70s, as sadistic as that sounds.

4   Goran_K   @   2012 Nov 28, 1:48am  

bmwman91 says

If they, nominally, have one house that they are going to sell over the next 20 years, that is ~3.9M houses per year, which would approximately double the current sales volume.

That's my point. Either the boomers continue working into their golden years, or they unload their homes and downsize so they can actually not die in the office.

I know what option I'd choose.

Not saying the extra volume will crash the market, but who knows.

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