John Grace returns… We have been taught that real estate prices are driven by location, inventory, and interest rates. I will argue all three are important to keep an eye on, but we have not been taught that the most significant driver is the buying AND selling patterns of American consumers Based On Age.
The primary reason residential real estate prices are at nose bleed levels is thanks to 76 million people born between 1946-1964 (legal, illegal, legitimate and illegitimate) that showed up in these United States of America. Prices rose as a direct result of unprecedented demand. In fact, there is no other country in history where so many people came into being during the same twenty year period. It’s also the first and perhaps the last time such an event will occur in U.S. history.
Thanks to the U.S. Census Bureau we can see the buying and selling patterns. Please recognize that the patterns have held irrespective of high or low interest rates. In the early 1980s when Boomers were entering the work force interest rates were 16% but that had no effect on educated well paid young people with their high demand for buying homes. The age most Americans buy their first home was 31. It is now 37.