Tuesday, December 06, 2005

Baby Boomers and the Housing Market

For those who like doom and gloom in the housing market you will enjoy these two reports:

In a article entitled "Fed Study Says Home Prices May Fall as Population Ages" claims that US housing prices could collapse by 2015 if the retiring baby-boomers reduce the labor pool and productivity.

In study entitled "The Baby Boom: Predictability in House Prices and Interest Rates" stated "In the near term, house prices will peak in level terms sometime between 2005 and 2010" and a collapse would begin by 2015 according to this study. "Following the peak, house prices will decline over 30% in value over the next 50 years."

The authors indicated the credibility for this study is based on his model's ability to predict the boom and bust of the Japanese real estate markets in '74 and '90

The study was written by Robert Martin, an economist in the Fed's division of international finance. The report is not an official view from the Federal Reserve.

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