Sunday, April 24, 2005

Baby Boomers Are The El Nino Of Housing Bubble

Remember when everything was blamed on the weather phenomenon El Nino? The population bulge known as the Baby Boom is referred to in just about every story which tries to explain away the price explosion in homes.

"Baby boomers are coming into their own with money, and real estate is more of a sense of security."

When sales slow down, again, it's the boomers. "As the baby boomers are getting older they are downsizing, potentially. They don't need to buy as many home furnishings and they may even be pushing some of their furnishings off on their children, who may not go out and buy."

18 Comments:

At 12:05 PM, Anonymous Anonymous said...

You boomers deserve everything coming to you. Greedy bastards. Its good to see that many of you will be bankrupt before you bankrupt your grandchildren. Shame on you for saddle your kids and grandchildren with your foolish debt.

 
At 12:08 PM, Anonymous Anonymous said...

Baby Boomers have done an enormous screw job on America. From the decay of ethics and moral standards they started in the sixties, to the excessive Social Security benefits they've voted themselves that far outstrip the value of their contributions, to the pensions crisis, and now the housing bubble. I guess it's good to be a baby boomer and live high on everyone else's dime.

 
At 12:24 PM, Anonymous BKlawyer said...

I've seen that money matters (including bankruptcy) are, in fact generational and familial. If a couple needs to file BK then most likely we will be filing for children, grandparents, et al.
Similarly, I'm sure that when all this shakes out we'll see a cross section of relatives that have made the investment purchase of second homes, cashed out the ATM-house loans to pay off cars, credit cards, etc.

I have intelligent lawyer (an oxymoron?) friends who are purchasing million dollar+ homes as "investments". IF they can turn them quickly (which they have been lucky doing so far) they turn a quick profit here in hyper-balloon-a-thon San Diego.

However, as other bloggers have noted, when the music stops, if you're holding one of these 2d homes, then you will be hurt in a very big way. In the last year over 36% of homes purchased were either as a second home or as residential investment. The terms "residential" and "investment" should not be uttered in the same breath by an individual trying to make money. History has shown that.

My $.02

 
At 12:40 PM, Blogger Ben Jones said...

BKLawyer,
Thanks for the insight. You have really helped us out.

 
At 12:55 PM, Blogger John Law said...

I bet it's because the son and the father(etc.) comapared notes and got invested in similar business, stocks and etc.

 
At 3:04 PM, Anonymous Anonymous said...

"Baby Boomers Are The El Nino Of Housing Bubble"

So does that mean that easy credit is "Global Warming" for all financial concerns?

-Generic

 
At 3:13 PM, Anonymous Anonymous said...

Hey, don't blame all us baby boomers for this mess! We're not all greedy bastards, and lots of greedy bastards ain't baby boomers.

 
At 4:18 PM, Blogger Ben Jones said...

(don't blame all us baby boomers for this mess! We're not all greedy bastards, and lots of greedy bastards ain't baby boomers)

I agree with both of you. I was born in 1964, so I am on the last year of the BB. I have heard my group called Generation Jones.

There will be much age blame as the bust transpires; unfortunate but unavoidable. That is one reason I like to keep a focus on the creators of the bubble, so hopefully we don't turn on each other. We're all in this together!

 
At 4:27 PM, Anonymous Anonymous said...

I think the important question is what caused baby boomers to be what they are? Was it simply a matter of the livin' being too easy in the 50s & 60s forward? Were the WWII parents too disciplined by war and depression that boomers never got to see what bad times look like?

Can a generation like the boomers be prevented?

 
At 4:30 PM, Anonymous Anonymous said...

(That is one reason I like to keep a focus on the creators of the bubble, so hopefully we don't turn on each other. We're all in this together!)

Ben, only up to a point. The boomers get to die, and we'll still be stuck with the mess.

 
At 4:37 PM, Blogger Ben Jones said...

(Were the WWII parents too disciplined by war and depression that boomers never got to see what bad times look like)

In my case, both my parents lived through the dust bowl in west Texas and with 7 children, we learned to be frugal. But that was a regional situation that many didn't experience. I have always thought the BB was too broad a term. Still, no question they share some odd traits.

 
At 6:31 PM, Anonymous BKlawyer said...

Excellent book which will inflame the 60's generation, the baby boomers and women. "The two income trap" argues that it is, in part, FEMINISM that is at the heart of our debt problems.

When women ventured outside of the home to begin working they provided a second income where before there had only been one. With this added income, couples needed a second car, right? Two incomes supports a MUCH more expensive home, right? And we don't have to save more because with two incomes we will be able to retire real soon, right? Great school districts in expensive neighborhoods became extremely important while keeping one parent at home did not.

With both parents working, junior is raised by a babysitter, or worse: hence the appearance on the "tweeners" or "slackers" who don't feel as attached to family, are more likely to live with their folks well into their 30s, are not interested in working long hours towards a career and spend: JUST LIKE THEIR PARENTS!!!!
A provocative book that is dead on in a lot of respects.

 
At 8:15 PM, Blogger Sunny said...

I've always wondered about lumping people into any kind of generational pool. The age groups are defined so broadly and they are spoken of as if they all think the same way and like the same things. Seems like the press can't write articles that don't make broad demographic assumptions.

BKlawyer, interesting comment about tweeners and slackers. A backlash perhaps, I know I've decided early on that money and ambition are just not worth the hassle. Its not because my parents were ambitious but because my peers were. Solomon said something about it..."All is vanity...."

 
At 3:09 AM, Anonymous Anonymous said...

You can't generalize about any large group of people. We boomers did grow up in the post-war prosperity of the '50s and '60s. But what I remember growing up is that everything was so damned crowded! It's like the country wasn't ready for all of us. The classrooms were bursting at the seams. We used to eat our lunch in the auditorium because the lunchroom wasn't big enough. And when we finally graduated from school, we were all competing against each other for too few jobs. Maybe we didn't have to go through a Great Depression and a World War like our parents, but don't make it sound like it was all easy street, either. Remember, many of us also got caught in the Vietnam War draft, and some 50,000 of their names are on a wall in Washington, D.C.

 
At 7:47 AM, Anonymous Anonymous said...

the baby boomers will go down in american history as the entitlement generation...

 
At 10:18 AM, Anonymous Anonymous said...

To expand on BKlawyer's comment about the Two Income Trap (it's an excellent book; eas y to read and has great examples):

One of the main points was that two-income families became very focused on the tight association with housing prices and schools. It has become fashionable to not limit budgets when it comes to raising children. Hence nearly every product that preys on parents insecurities about children is able to raise prices. Examples are houses (to get "safe" neighborhoods and "good" schools), children's safety products (strollers, child car seats, SUVs), and pre-schooling. One of the authors solutions to the housing situation was to compare the cost of houses of good school districts vs. the cost of tuition at private schools. In many cases, a sign of a school district bubble is when the cost of tuition is greater than the increased payments required to get into a good school district.

 
At 12:26 PM, Blogger Me said...

Anymore a family cannot financially survive without two incomes. The massive number of women venturing into the workforce coupled with baby boomers brought about inflation. This helped fuel the housing bubble. This, however, is all at of cost of our youth. Our youth today are alot more corrupt then in the past and they will be the ones running our country when we retire.

 
At 12:29 PM, Anonymous Anonymous said...

Those who do not learn history are doomed to repeat it. Civilizations rise and fall!!

 

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