There was an interesting letter in the May 24 Wall Street Journal referring to a May 12 article on bleak years ahead for housing. I caught the letter but missed the first article.

The jist of the logic is based on rough numbers that anybody can check.

There are about 78 million baby boomers, 40 million (and rapidly decreasing) parents of baby boomers. Generation X numbers about 37 million. Also on average baby boomers have saved $140,000 for retirement.

Can anybody make a case that those numbers are wrong?

The parents of baby boomers are rapidly dying off and their houses are coming onto the market. Baby boomers will be selling their homes and downsizing to fund retirement. So in a very generalized way there is housing for 40 million plus 78 million that will need to be sold to 37 million.

The result - falling home prices and construction staying in the dumps.

The only solution the writer sees to balance out the two is immigration.

Bring on the Mexicans.

No I don't see anything wrong with your logic, Americans have been building houses that need a great room not a living room, a master bedroom with a basket ball court in it, and in some cases an additional room with a actual bed in it. Some where along the line housing went from fitting the needs of a family to stroking ego and in doing so inflated the prices so everybody could be a millionaire.

Then comes the crash.

I am not passing fault, nobody is at fault or we all are, it just is, we have been given a dose of reality and we don't like it.

House prices will come way down and this will hurt the economy and the prices I don't believe will go back at such a fast pace as they did before.

River

With all the overly large houses on the market there is a good case to have more communes. But speaking from my personal experience I've never been able to get anyone in my trailer park to share phone, cable, coffee or barbecue bills with. People aren't usually willing to put up their share especially if they're smokers, drinkers or any other type of druggie.

I'm very hesitant to trust others. Where I live two guys needed some stuff done so I got busy and helped them. I needed a new roof over my head which I let them start. They left it open for several weeks and in the meantime it DID rain (of course). They also trashed out my lawn, and I picked up after them for more time than they worked on my roof. One day they got into a disagreement about how to put up the metal roofing on my roof. I knew how but my knowledge was the one that was not considered. They decided to leave for some coffee and never returned. I had a felt roof during that winter after which I finished putting up the metal roofing by myself and did numerous other stuff.

I lost my savings trying to run a business paying Americans a living wage for doing a job 90% complete, so I know what you mean, Dev. That seems to be what you get when the unemployment rate is 3% or when you look where you looked. It doesn't mean you cannot get a job done. It just means you and I were looking in the wrong pool.

I appreciate your comment, River, but immigration does not necessarily mean only Mexicans. I am sure there are a lot of Irish a wee bit put out by the domestic opportunities. The Poles have flooded out thru Europe and have a pretty good reputation. I am see Africans at professional courses who are really sharp. There are people out there of all colors who will do everything from engineering to physical labor, if we are picky.

You had to be blind not to see that real estate values would eventually crash down to the level of simple inflation. I had already lived through a couple of real estate bubbles in California and resisted all temptations to "take some equity" out of my house. I calculated, using the stated rate of inflation for every year since the purchase, that the value of my house from the original purchase price of $20,000, in 1971, would have inflated to $260,000 by 2008, when I turned 65. Neighbors, friends, family members and others told me that I was being unduly pessimistic and the housing values would never go down to the level of simple inflation.

At the height of the bubble my house was valued at $615,000 and I was constantly being pestered by real estate agents and bank loan officers to either sell (Which I would have done at the top of the market if we had plans to move to a lower cost state.) or take out a loan for whatever. Although we did refinance for some remodeling I refused to get a mortgage higher than $160,000, much to the puzzlement of the loan officers.

Comes the bottom of the crash and the value of similar houses in this neighborhood dropped to $290,000. My calculations were a bit conservative, but that's OK. At least I can afford what is left of my mortgage and I am not walking away from an upside down loan. (As several solidly employed people in this neighborhood have had to do.) or begin looking at a reverse mortgage to finance retirement.

The article is right in the sense that there is a glut of housing on the market which will only get larger in the foreseeable future and keep the prices down to the simple inflation level for a long time to come. As for the notion that immigration should be encouraged to prop up the housing market, any politician who espouses that should be needs to face an immediate recall election. The discussion of the quality of the American worker needs at least another entire thread.

On the other hand the price of rentals is going up fast.

People who can't afford those big houses are having to

downsize to rentals and are causing a lot of pressure on

renters. Mine just went up 20%.

The Premise of the thread.

Seems odd when average working people cannot afford a house.

Moi

coinflipper_21 (imported) wrote: Thu May 26, 2011 4:42 pm As for the notion that immigration should be encouraged to prop up the housing market, any politician who espouses that should be needs to face an immediate recall election.

That was the only solution the writer could think of to balance people and the number of homes for sale.

Do you have another solution or would you rather say that we should just take our medicine no matter how long it takes?

There is a housing market but it isn't in new construction or those thousands of square feet semi-mansions,

They are the older, late 50's early sixties tract houses that were build sturdy and comfortable. Not big, one bath with remodeled basements and all that comes from that age.

The go up for sale when the older owners die and they are modestly priced. They always need new carpets, window treatments, paint jobs and all sorts of cosmetic stuff inside. But they are sturdy and well built. They are good buys.

Plus copper wiring.

There are some incredibly low priced low end stuff in our fair capital city. We are thinking of buying one for each of the kids as a legup for when they are grown and need experience and a financial history as an property owner.